Check Each week Startups serves 53,000 customers who purchase an average of 2.50 cups of coffee per week (132,500 cups total). Starcups's contribution margin income statement for a typical week is shown below: Sales Revenge Variable Coat Contribution Margin Fixed Costa Net Operating Income Units Per Unit Total 132,500 36.60 $874,500 132,500 2.30 371,000 132,500 $3.00 $503, 500 113,000 $390,500 Assume the new cup promotion is expected to impact sales volume, revenue, fixed, and variable costs as follows: Startups estimates that 25% of its current customers (13,250) will participate in the promotion. The remainder of its existing customer base (39.750) will continue to buy an average of 2.50 cups of coffee per week. Starcups expected to attract 6,300 new customers to participate in the promotion Customers who participate in the promotion will pay an additional $1.00 for the reusable cup. They will then receive a 20% discount on repeat visits when they bring back their reusable cup. . The additional variable cost of purchasing the reusable cup is $2.80. The variable cost savings of the paper cup is $.30. Starcups expects that customers who participate in the reusable cup promotion will visit an average of 4 times per week. including the first purchase of the reusable cup. Starcups will spend a total of $23,000 per week advertising the reusable cup promotion Required: 1. Prepare a contribution margin income statement to predict how the reusable cup promotion will impact weekly net operating income. 2. Compute the difference in total revenue, total variable costs, total contribution margin, total fixed costs, and total operating income before and after the promotion. 3. How will this sustainability initiative impact the company's triple bottom line? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a contribution margin income statement to predict how the reusable cup promotion will impact weekly net opera income. Units Per Unit Total Customers who do not participate: Sales Revenue Variable Costs Contribution Margin 99,375 $ 99,375 $ 6.60 $ 2.80 $ 3.80 $ 655,875 278,250 377,625 99,375 $ $ First purchase for customers to buy the reusable cup: Sales Revenue Variable Costs Contribution Margin es $ $ ooo $ Repeat visits for customers who buy the reusable cup: Sales Revenue Variable Costs Contribution Margin $ ooo $ Required Required 2 > Required 1 Required 2 Required 3 Compute the difference in total revenue, total variable costs, total contribu income before and after the promotion. Differct.ce Sales Revenue Variable Costs Contribution Margin Fixed Costs Net Operating Income
