The San Diego Padres were approached by Health Food, Inc. (HFI), which specializes in the preparation of meals for professional athletes. HFI stated it would prepare all meals at the San Diego Padres Baseball Academy (SDPBA), located in the Dominican Republic, to required specifications and deliver them on for $11.50 per meal. Currently, meals are prepared in-house. The SDPBA has recently seen a steady decline in the number of athletes attending, and was determined to hold the line on costs wherever possible.

The front office did not have a clear idea about what the present system of providing meals to the athletes was costing. Front office staff (MBA interns) gathered the information below, which covered expenses for the dietary department for the past year.

The SDPBA facility has a maximum occupancy of 120 athletes. It is open year-round, and has a 33% occupancy rate. Athletes are served an average of 2.8 meals per occupancy day.

It was determined that the nutritionist provided valuable counseling and advising services. Should the Padres eliminate in-house meal preparation, it would want to retain her services. Also, the front office wanted to keep and maintain the kitchen and equipment.

REQUIRED:

Using the high-low method and regression analysis, determine the variable and fixed costs of the in-house meal service.

Other Nutritionist Staff $ 2,875 2,875 2,875 2,875 2,875 $ 2,875 July $ 2,875 August $ 2,875 2,875 September $ October 2,875 $ November $ 2,875 December $ 2,875 TOTAL $ 34,500 January February $ March $ April $ May $ June $ 3,122 $ 2,908 $ 2,655 $ 2,600 $ 2,433 $ 2,083 $ 1,809 $ 2,322 $ 1,434 $ 2,700 $ 2,798 $ 2,600 $ 29,464 Food Costs Maintenance Kitchen & Equipment $ 9,674 $ 1,401 $ 1,649 $9,184 $ 1,322 $ 1,415 $ 8,302 $ 1,322 $ 1,313 $ 7,084 $ 1,288 $ 1,105 $ 6,398 $ 1,200 $ 1,089 $ 4,338 $ 1,133 $ 1,011 $ 3,612 $ 1,093 $ 900 $ 6,275 $ 1,122 $ 1,112 $ 6,734 $ 1,235 $ 1,103 $ 9,002 $ 1,302 $ 1,300 $ 8,456 $ $ 1,442 $ 7,798 $ $ 1,396 $ 86,857 $ 15,040 $ 14,835 1,300 1,322 Athlete Days 1,382 1,312 1,186 1,012 914 604 516 896 962 1,286 1,208 1,114 12,392