Bene PetitFirst year operating data:Single(1 serving)Family(4 servings)Dual(2 servings)TotalCustomer Meals Sold3,0005,00012,00020,000Total Customer Servings3,00010,00048,00061,000Customer Orders(Average = 4 meals per order)7501,2503,0005,000Number of Donated Meals(1 per customer meal)3,0005,00012,00020,000Number of Donated Deliveries(500 meals per delivery)6.102440Bene Petit currently offers three meal sizes: single-serve, dual-serve, and family-sized. Single-serve mealsmake up about 5% of total sales revenue and have the lowest contribution margin of the three products. Tayloris trying to decide whether to eliminate single-serve meal kits but is unsure how it would affect profit and thenumber of meals donated to homeless families. The following additional details are available:The variable costs of the single serve meals (as well as the donated meals) could be avoided.About 10% of the fixed costs that are currently allocated to the single serve meals could beavoided.Taylor believes that about 25% of single serve customers would switch to dual-serving meals, butwould reduce their order size to from 4 meals per week to 2 meals per week.Should Taylor eliminate the single-serve meals from her product/service offering? Why or why not?

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Should Taylor eliminate the single-serve meals from her product/service offering? Why or why not?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

Bene Petit
First year operating data:
Single
(1 serving)
Family
(4 servings)
Dual
(2 servings)
Total
Customer Meals Sold
3,000
5,000
12,000
20,000
Total Customer Servings
3,000
10,000
48,000
61,000
Customer Orders
(Average = 4 meals per order)
750
1,250
3,000
5,000
Number of Donated Meals
(1 per customer meal)
3,000
5,000
12,000
20,000
Number of Donated Deliveries
(500 meals per delivery)
6.
10
24
40
Bene Petit currently offers three meal sizes: single-serve, dual-serve, and family-sized. Single-serve meals
make up about 5% of total sales revenue and have the lowest contribution margin of the three products. Taylor
is trying to decide whether to eliminate single-serve meal kits but is unsure how it would affect profit and the
number of meals donated to homeless families. The following additional details are available:
The variable costs of the single serve meals (as well as the donated meals) could be avoided.
About 10% of the fixed costs that are currently allocated to the single serve meals could be
avoided.
Taylor believes that about 25% of single serve customers would switch to dual-serving meals, but
would reduce their order size to from 4 meals per week to 2 meals per week.
Should Taylor eliminate the single-serve meals from her product/service offering? Why or why not?

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