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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 20% discount each time they return with the cup to buy a cup of coffee. Each week Starcups serves 43,000 customers who purchase an average of 3.00 cups of coffee per week (129,000 cups total). Starcups's contribution margin income statement for a typical week is shown below: Sales Revenue Variable Cost Contribution Margin Fixed Costs Net Operating Income Units Per Unit Total 129,000 $4.60 $593,400 129,000 1.80 232,200 129,000 $2.80 $361,200 103,000 $258, 200 Assume the new cup promotion expected to impact sales volume, revenue, fixed, and variable costs as follows: Starcups estimates that 30% of its current customers (12,900) will participate in the promotion. The remainder of its existing customer base (30,100) will continue to buy an average of 3.00 cups of coffee per week. . Starcups expected to attract 5,300 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 $1.80. The variable cost savings of the paper cup is $.20. . Starcups expects that customers who participate in the reusable cup promotion will visit an average of 4 times per week, including the purchase of the reu cup. Starcups will spend a total of $13,000 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 nnaratin inrama Required 1 Required 2 Required 3 Prepare a contribution margin income statement to predict how the reusable cup promotion will impact weekly net operating income. Units Per Unit Total Customers who do not participate Sales Revenue Variable Costs Contribution Margin 90,300S 90,300S 90,300S 4.60S S 415,380 1.80S 2.80S 252,840 162.540 First purchase for customers to buy the reusable cup: Sales Revenue 18,200S Variable Costs 18,200S Contribution Margin 18,200S 5.60S 3.40S 2.20 S 101,920 61,280 40,040 244,608 Repeat visits for customers who buy the reusable cup: Sales Revenue 54,600S Variable Costs 54,600 S Contribution Margin 54,600 S 4.48 XS 3.40 XS 1.08 S 185,640 56,988 ne additional variable cost of purchasing the reusable cup is $1.00. Ine variable cost savings of the paper cup 15 $.20 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 $13,000 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 Compute the difference in total revenue, total variable costs, total contribution margin, total fixed costs, and total operating income before and after the promotion. Sales Revenue Variable Costs Contribution Margin Fixed Costs Net Operating Income Difference $ 168,508 177,860 $ (9,352) $ 13,000 $ (22,352)
