Genre AB Guest CORO Dungeon 00.00. 28 UN THE do 1000 150.000 Mar el offee del 25 wenn Dar urder Wh 600 cine HU para O w ' Drive - Google Starcups Coffee Company is launching a new sustainability initiative that would reward customers for purchasing a reusable cup. During the cup promotion, customers would pay an extra $1.00 for the reusable cup and would receive a 25% discount each time they return with the cup to buy a cup of coffee. Each week Starcups serves 40,000 customers who purchase an average of 2.5 cups of coffee per week (100,000 cups total). Starcups's contribution margin income statement for a typical week is shown below. Units Per Unit Total Sales Revenue 100,000 $4.00 $400,000 Variable Cost 100,000 1.50 150,000 Contribution Margin 100,000 $250 $250,000 Fixed Costs 100,000 Net Operating Income $150,000 Assume the new cup promotion is expected to impact sales volume, revenue, fixed, and variable costs as follows: . Starcups estimates that 25% of its current customers (10,000) will participate in the promotion. The remainder of its existing customer base (30,000) will continue to buy an average of 25 cups of coffee per week. Starcups expected to attract 5,000 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 25% discount on repeat visits when they bring back their reusable cup The additional variable cost of purchasing the reusable cup is $1.50. The variable cost savings of the paper cup is $0.25 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 $10,000 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 Units Per Unit Total 0 Customers who do not participate Sales Revenue Variable Costs Contribution Margin $ $ $ 4.00 $ 1.50 $ 250 $ 0 0 First purchase for customers to buy the reusable cup: Sales Revenue Variable Costs Contribution Margin $ $ OOO $ $ 0 Repeat visits for customers who buy the reusable cup. Sales Revenue Variable costs Contribution Margin 5 0 0 $ Customers who do not participate Sales Revenue Variable Costs Contribution Margin $ $ $ 4.00 $ 1.50 $ 2.50 $ 0 First purchase for customers to buy the reusable cup Sales Revenue Variable costs Contribution Margin won ololo $ $ Repeat visits for customers who buy the reusable cup Sales Revenue Variable Costs Contribution Margin $ ololo $ 2. Compute the difference in total revenue, total variable costs, total contribution margin, total food costs, and total operating income before and after the promotion Difference Sales Revenue Variable Costs Contribution Margin Fixed Costs Net Operating Income 3. How will this sustainability initiative impact the company's triple bottom line? Positive impact Negative impact Check my work
