Question
Swanair Plc have now decided to fly between London and Paris, using one of their 130 seat aircraft. They would like to offer customers on
Swanair Plc have now decided to fly between London and Paris, using one of their 130 seat aircraft. They would like to offer customers on the new route the option to purchase sandwiches on board. Croissant SA, a local bakery in Paris, has offered to supply sandwiches to Swanair Plc. The sandwiches would be freshly made on site and delivered to the aircraft for the return flight from Paris to London. Croissant SA already supplies fresh sandwiches to the majority of airlines in the airport, but would need to hire an additional vehicle at a cost of 85 per day to transport the sandwiches to Swanair Plc's aircraft. Each sandwich would be sold for 3.50 and the preparation costs were estimated at 1.55 per sandwich for the ingredients and 0.35 per sandwich for labour. There is sufficient storage space in the bakery's fridge to store all the ingredients, sandwiches and any left-over ingredients for use the next day. The bakery currently pays 80 per day for the fridge storage facility. Based on their existing operations with airlines, Croissant SA estimated they could achieve a daily target profit of 36.
Use CVP analysis techniques to support your decision and include all relevant calculations.
Refer to the information above to illustrate your answer with diagrams.
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