need help on "Net revenue from operating the cafeteria" on b
Crane 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 $198.000 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 $140,000 per year. Depreciation on the cafeteria equipment is $19,000 per year. Other fixed overhead that is directly related to operating the cafeteria totals $14,000 per year. Cullumber Foods has offered to take over Crane's cafeteria operations. As part of the transition, current cafeteria employees would become Cullumber employees, and Cullumber would assume all out-of-pocket costs to operate the cafeteria. Cullumber would continue to offer meals at $5 each and would pay Crane $1 per meal for the use of its cafeteria facilities. (a) Your answer is correct. Calculate the net revenue from cafeteria operations and revenue from outsourcing the cafeteria to Cullumber Foods. Net revenue from operating the cafeteria $ 8000 Revenue from outsourcing the cafeteria 72000 Should Crane continue to operate the employee cafeteria, or should the company accept Cullumber's offer? Crane should accept Cullumber's offer. e Textbook and Media Assistance Used Attempts: 1 of 3 used (b) Your answer is partially correct. Assume that Crane accepted Cullumber's offer two years ago and that all costs have remained constant. Since then, a new shopping mall has opened close to the company's location, bringing in several fast-food and quick-service restaurants. Employee demand for cafeteria service has dropped to 2.700 meals per month, and Cullumber has laid off two of the five cafeteria workers Assume that Crane accepted Cullumber's offer two years ago and that all costs have remained constant. Since then, a new shopping mall has opened close to the company's location, bringing in several fast-food and quick-service restaurants. Employee demand for cafeteria service has dropped to 2,700 meals per month, and Cullumber has laid off two of the five cafeteria workers. Calculate net revenue from operating the cafeteria and the revenue from outsourcing the cafeteria. -9900 Net revenue from operating the cafeteria $ 32400 Revenue from outsourcing the cafeteria To offset the lower demand for meals, Best Ever is proposing to increase the price per meal from $5 to $6 per meal. Does it make financial sense for Crane to renew Cullumber's contract for another year, or should it resume operation of the cafeteria operation and charge the proposed $6 per meal price? The company shoud not resume the operation of the cafeteria e Textbook and Media
