Requirement 1
A | B | C= A*B | |
Particulars | Units | Per Unit | Total |
Customers who do not participate | |||
Sales Revenue | 95,625 | 6.20 | 592,875 |
Variable Costs | 95,625 | 2.60 | 248,625 |
Contribution Margin | 95,625 | 3.60 | 344,250 |
First Purchase of Customer to Buy Reusable Cups | |||
Sales Revenue | 18,850 | 7.20 | 135,720 |
Variable Costs | 18,850 | 5 | 94,250 |
Contribution Margin | 18,850 | 2.20 | 41,470 |
Repeat Visit for Customer who buys the reusable cup | |||
Sales Revenue | 56,550 | 4.96 | 280,488 |
Variable Costs | 56,550 | 2.40 | 135,720 |
Contribution Margin | 56,550 | 2.56 | 144,768 |
Contribution Margin = Sales Revenue - Variable Costs
For Customer who do not Participate
Units = 38,250 Customer * 2.5 Cup per Week = 95,625 Cups of Total Coffee
For First Purchase of Customer
Units = 12,750 + 6,100(New Customers) = 18,850
Sales Price = 6.20 + 1 (for Cup) = 7.20
Variable Costs per Cup = 2.60 + 2.60 ( Additional Purchase of Cups) - 0.20 (Savings in Paper Cup) = $ 5
Repeat Visit for Customer who buy Reusable Cups
Units = 18,850 * 3 = 56,550
Sales Price = 6.20 - 20% of 6.20 = $ 4.96
Variable Costs = 2.60 - 0.20(Savings of avoiding Paper Cups) = $ 2.40
Requirement 2
Particulars | Difference |
Sales Revenue | 218,583 |
Variable Costs | 147,095 |
Contribution Margin | 71,488 |
Fixed Costs | 21,000 |
Net Operating Income | 50,488 |
Net Operating Income = Contribution Margin - Fixed Costs
Sales Revenue before Promotion = $ 790,500
Sales Revenue after Promotion = 592,875 + 135,720 + 280,488 = $ 1,009,083
Difference in Sales Revenue = 1,009,083 - 790,500 = $ 288,705
Variable Costs before Promotion = $ 218,583
Variable Costs after Promotion = 248,625 + 94,250 + 135,720 = $ 478,595
Difference in Variable Costs = 478,595 - 331,500 = $ 147,095
Contribution Margin before Sales Promotion = $ 459,000
Contribution Margin after Sales Promotion = 344,250 + 41,470 + 144,768 = $ 530,488
Difference in Contribution Margin = 530,488 - 459,000 = $ 71,488
Fixed Costs before Sales Promotion = $ 111,000
Fixed Costs after Sales Promotion = 111,000 + 21,000 = $ 132,000
Net Operating Income before Sales Promotion= $ 348,000
Net Operating Income after Sales Promotion = 530,488 - 132,000 = $ 398,488
Difference in Net Operating Income = 398,488 - 348,000 = $ 50,488
Requirement 3
Positive Impact.
Starcups Coffee Company is launching a new sustainability initiative that would reward customers for purchasing a...
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Starcups Coffee Company is launching a new sustainability initiative that would reward customers for purchasing a reusable cup. During the cup promotion, customers would pay an extra $1.00 for the reusable cup and would receive a 25% discount each time they return with the cup to buy a cup of coffee. Each week Starcups serves 49,000 customers who purchase an average of 3.00 cups of coffee per week (147,000 cups total) Starcups's contribution margin income statement for a typical week...
Starcups Coffee Company is launching a new sustainability Initiative that would reward customers for purchasing a reusable cup During the cup promotion, customers would pay an extra $1.00 for the reusable cup and would receive a 20% discount each time they return with the cup to buy a cup of coffee Each week Starcups serves 56,000 customers who purchase an average of 2.00 cups of coffee per week (112,000 cups total). Starcups's contribution margin Income statement for a typical week...
Starcups Coffee Company is launching a new sustainability Initiative that would reward customers for purchasing a reusable cup. During the cup promotion, customers would pay an extra $100 for the reusable cup and would receive a 25 percent discount each time they return with the cup to buy a cup of coffee. Each week Starcups serves 40,000 customers who purchase an average of 2.5 cups of coffee per week (100,000 cups totall. Starcups's contribution margin income statement for a typical...
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