Question
Bene Petit First year operating data: Single (1 serving) Dual (2 servings) Family (4 servings) Total Customer Meals Sold 3,000 5,000 12,000 20,000 Total Customer
Bene Petit First year operating data: | ||||
Single (1 serving) | Dual (2 servings) | Family (4 servings) | Total | |
Customer Meals Sold | 3,000 | 5,000 | 12,000 | 20,000 |
Total Customer Servings | 3,000 | 10,000 | 48,000 | 61,000 |
Customer Orders (Average = 4 meals per order) | 750 | 1,250 | 3,000 | 5,000 |
Number of Donated Meals (1 per customer meal) | 3,000 | 5,000 | 12,000 | 20,000 |
Number of Donated Deliveries (500 meals per delivery) | 6 | 10 | 24 | 40 |
Bene Petit currently offers three meal sizes: single-serve, dual-serve, and family-sized. Single-serve meals make up about 5% of total sales revenue and have the lowest contribution margin of the three products. Taylor is trying to decide whether to eliminate single-serve meal kits but is unsure how it would affect profit and the number of meals donated to homeless families. The following additional details are available:
- The variable costs of the single serve meals (as well as the donated meals) could be avoided.
- About 10% of the fixed costs that are currently allocated to the single serve meals could be avoided.
- Taylor believes that about 25% of single serve customers would switch to dual-serving meals, but would reduce their order size to from 4 meals per week to 2 meals per week.
Should Taylor eliminate the single-serve meals from her product/service offering? Why or why not?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started