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

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

Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter8: Current And Contingent Liabilities
Section: Chapter Questions
Problem 29CE: Unearned Sales Revenue Brand Landscaping offers a promotion where a customers lawn will be mowed 20...
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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?
Transcribed Image Text: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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