Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Blossom Communications operates a customer call center that handles billing inquiries for several large insurance firms. Since the center is located on the outskirts

image text in transcribed

Blossom Communications operates a customer call center that handles billing inquiries for several large insurance firms. Since the center is located on the outskirts of town, where there are no restaurants within a 20-minute drive, the company has always operated an on-site cafeteria for employees. The cafeteria uses $234,000 in food products each year and serves 6,000 meals per month, at a price of $5 each. It employs five workers whose salaries and benefits total $105,000 per year. Depreciation on the cafeteria equipment is $18,000 per year. Other fixed overhead that is directly related to operating the cafeteria totals $13,000 per year. Crane Foods has offered to take over Blossom's cafeteria operations. As part of the transition, current cafeteria employees would become Crane employees, and Crane would assume all out-of-pocket costs to operate the cafeteria. Crane would continue to offer meals at $5 each and would pay Blossom $1 per meal for the use of its cafeteria facilities. (a) Calculate the net revenue from cafeteria operations and revenue from outsourcing the cafeteria to Crane Foods. Net revenue from operating the cafeteria $ Revenue from outsourcing the cafeteria $ Should Blossom continue to operate the employee cafeteria, or should the company accept Crane's offer? Blossom shoul accept Crane's offer. reject eTextbook and ivedia

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting Theory and Analysis Text and Cases

Authors: Richard G. Schroeder, Myrtle W. Clark, Jack M. Cathey

10th edition

470646284, 978-0470646281

More Books

Students also viewed these Accounting questions