Read Case Study Mead Meals on Wheels

Case Study Mead Meals on Wheels

The Mead Meals on Wheels Center (MMWC) provides meals every day to the homebound elderly. The city of Wabash pays MMWC $32 per week for each person it serves. There is no shortage of demand for MMWCs services among the elderly citizens of Wabash, and MMWC can find qualified recipients for as many meals as it can deliver. Each person helped by MMWC receives two hot meals per day, seven days per week, for a total of 14 meals every week.

To service the contract, MMWC has a central kitchen that has the capacity to produce a maximum of 9,600 meals per day. It costs MMWC an average of $36,000 per week to operate the kitchen and other central facilities regardless of the number of meals that MMWC serves. This covers all of MMWCs fixed costs (e.g., rent, equipment costs, and its personnel including administrative staff) as well as its fixed seasonal service contract costs (utilities, snow removal, etc.).

The first problem that MMWC faces is figuring out how much it can afford to spend per person, per week for food to supply the program. Food is MMWCs only variable expense. You are MMWCs only program analyst.

Question #5: Incorporating all of the things that have happened during the year, as well as you capital budgeting recommendation

Budget	Amount in $			Amount in $
	Quarter			Annual
		Working	Formula used		Working	Formula used
Variable costs:	384.00	(32*4*3)	Formula used: variable cost each meal (32)* number of weeks in a month (4)* number of months in a quarter (3)* number of quarters in year (4)	1,536.00	(32*4*3*4)	Formula used: Variable cost each meal (32)* number of weeks in a month (4)* number of months in a quarter (3)* number of quarters in year (4)
Fixed costs	432,000.00	(36,000*4*3,)	Formula used: variable cost each meal (36,000)*number of weeks in a month (4)* number of months in a quarter (3)* number of quarters in year (4)	1,728,000.00	(36,000*4*3*4)	Formula used: variable cost each meal (36,000)* number of months in a quarter (3)* number of quarters in year (4)
Total budgeted costs	432,384.00			1,729,536.00