Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Cullumber 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 $100,000 per year. Depreciation on the cafeteria equipment is $19,000 per year. Other fixed overhead that is directly related to operating the cafeteria totals $12,000 per year. Blossom Foods has offered to take over Cullumbers cafeteria operations. As part of the transition, current cafeteria employees would become Blossom employees, and Blossom would assume all out-of-pocket costs to operate the cafeteria. Blossom would continue to offer meals at $5 each and would pay Cullumber $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 Blossom Foods.

Net revenue from operating the cafeteria

$enter a dollar amount

Revenue from outsourcing the cafeteria

$enter a dollar amount

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

Step: 3

blur-text-image

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

Accounting Principles Volume 1 And Volume 2

Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Warren, Lori Novak

9th Canadian Edition

1119786649, 978-1119786641

More Books

Students also viewed these Accounting questions

Question

What are the HR forecasting techniques?

Answered: 1 week ago

Question

Define succession planning. Why is it important?

Answered: 1 week ago

Question

Distinguish between forecasting HR requirements and availability.

Answered: 1 week ago