Question
Starcups Coffee Company is launching a new sustainability initiative that would reward customers for purchasing a reusable cup. During the cup promotion, customers would
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 percent discount each time they return with the cup to buy a cup of coffee. Each week Starcups serves 41,000 customers, who purchase an average of 2.00 cups of coffee per week (82,000 cups total). Starcups's contribution margin income statement for a typical week is shown below: Sales Revenue Variable Costs Contribution Margin Fixed Costs Net Operating Income Units 82,000 82,000 82,000 Per Unit $ 4.20 1.60 $ 2.60 Total $ 344,400 131,200 $ 213,200 101,000 $ 112,200
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