Xpress Eats LTD$.$ is a hamburger chain with operations across North America. The company

operates using a typical fast food operations, however is considering adding food trucks in

order to increase business. Below is the CVP Income statement for Xpress Eats for the $1^{st}$

quarter of $2020$

Xpress Eats wants would like to remain using the same supplier for its meat; however, the J$.$K$.$

farms is increasing its prices by $$\frac{1}{?}$ pound of meat. Each pound of meat makes $4$ burgers $($Hint:

You will need to convert price per pound of meat to price per individual burger.$)$ Due to recent growth, Xpress Eats has decided to hire a new head chef that would cost the company $$25,000$

per quarter for the new position's salary, as well additional kitchen space for an annual rent of

$$100,000$ per year.

Xpress Eats believes that it can reduce variable marketing expenses by $$0\mathrm{.}10$ per burger by

increasing fixed marketing expenses by $$45,500.$ With this new marketing scheme, the

company believes it can generate a $7\%$ increase in sales volume all the while keeping the price

of each burger at $$5\mathrm{.}50.$

The company wants to put these changes into place by the third quarter of $2020$; however, it

needs to answer a few questions internally before it decides to move forward.

$.$ Management wants to obtain an understanding of the current situation before any

changes are implemented. Calculate the following:

a$.$ Find the unit contribution margin as well as the contribution margin ratio before

the changes are implemented.

b$.$ Find the breakeven point in burgers $($units$)$ and in sales dollars before the

changes are implemented. Round the answers up to the next whole number

after the changes are implemented.

d$.$ Find the new breakeven in burgers $($units$)$ and in sales dollars after the changes

are implemented. Round the answers up to the next whole number.

Based on the new cost structure, how many burgers would Xpress Eats need to sell to

maintain an operating profit of $$632,200?$ Round the answer up to the next whole

number.

Prepare a memo to Xpress Eats's Management explaining the following: What is the

impact on the company's Operating Income based on the above changes? Should the

company proceed with all the changes? If yes, why? If no$,$ what changes would you

suggest if the company wants to stay with its current meat supplier?

Another option for Xpress Eats is to expand to another city under its current operating

model of only selling one kind of burger. In order to expand to another city, Xpress Eat

has decided that it will need to invest in an aggressive marketing campaign in the new city. The marketing campaign will cause another $$425,000$ in fixed marketing expenses

to be incurred for the $1^{st}$ quarter $2020.$ The company will also need to hire a new

manager to run the new city's operations at a quarterly salary cost of $$35,500.$

a$.$ Based on this above information related to the possible expansion of the company,

what is the impact to operating income as compared to the original Incom

Whatement given on Page $1?$

c$.$ Xpress Eats would like to ultimately have a total target profit of $$1,000,000.$ How

many burgers must it sell to meet this target profit? Note: Round burgers up to the

whole burger.

Explain whether Xpress Eats should expand to another city based on the calculations

above. Also consider qualitative factors of expansion into a new city.