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L'AEI'E J Tasty Time Cafeteria operates cafeteria food services in public buildings in the Midwest. Tasty Time is contemplating a major change in its cost structure. Currently, all of their cafeteria lines are staffed with hourly wage employees who hand serve the food to customers. Henson Riggs, Tasty Time's owner, is considering replacing the employees with an automated self-service system. However, before making the change, Benson would like to hint? the consequences of the change, since the volume of business varies significantly from location to location. Shown below are the CUP income statements for each alternative. Sales Variable costs Contribution margin Fixed costs Net Income Personal Service System $2.5m,l} 11873th 3 25.tlll 1251111013 m {a} Determine the degree of operating leverage for each alternative. Automated SelfService System transom 1, 125mm 3 1 315.com 375nm w {b} Which altemative would produce the higher net income if sales increased by $25tl.tlll? {c} Using the margin of safety ratio, determine which alternative could sustain the greater decline in sales before operating at a loss. {d} Tasty Time's vice president of nance has offered another option. He suggests a different system that combines personal service at key points in the cafeteria line with a less expensive automated self -service system for the other items. The nancial information on iis system is given below: {1} {1} {3} {4} Blended Service System $2.5m.tlll osmotic 5 l,l]ll,illl Stillgtlll w Sales 1|v'ariable costs Contribution margin Fixed costs Net Income Determine the degree of operating leverage for this option. Hovir much would net income increase if sales increased by $231300? Using the margin of safety ratioI howr large of a decline in sales could this option sustain before operating at a loss. Which option do you recommend for Tasty Time Cafeteria