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The x company provides an onsite cafeteria for staff. the comany charges a flat price of 6.00 per meal and serves 25000 meals a year.

The x company provides an onsite cafeteria for staff. the comany charges a flat price of 6.00 per meal and serves 25000 meals a year. the latest financial report indicates that the cost per meal includes variabke costs ( food and labor) of 4.00 per meal and fixed costs of 1.00 per meal. an outside fim has iffeeed to take over and charge company y 3.50 per meal. if the cafeteria outsources 20% of the fixed costs can be eliminated. in addition, the space used for food prep could be outsourced and generate an income of 2000.00 a year for the cafeteria. assuming they outsource, the volume of meals and flat price remains the same, what is the financial impact of accepting the oursourcing offer? would it increase or decrease the cafereria income?

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