Plan for downsizing the current cafeteria operation

Assignment Help Business Management
Reference no: EM1334697

Mayfair Corporation currently subsidizes cafeteria services for its 200 employees. Mayfair is in the process of reviewing the cafeteria services because cost-cutting measures are needed throughout the organization to keep the prices of its products competitive. Two alternatives are being evaluated: downsize the cafeteria staff and offer a reduced menu or contract with an outside vendor.

The current cafeteria operation has four employees with a combined base annual salary of $110,000 plus additional employee benefits at 25% of salary. The cafeteria operates 250 days each year, and the costs for utilities and equipment maintenance average $30,000 annually. The daily sales include 100 entries at $4.00 each, $80 sandwiches or salads at an average price of $3.00 each, plus an additional $200 for beverages and desserts. The cost of all cafeteria supplies is 60% of revenues.

The plan for downsizing the current operation envisions retaining two of the current employees whose combined base annual salaries total $65,000. An entree would be offered, and prices of the remaining items would be increases slightly. Under this arrangement, Mayfair expects daily sales of 150 sandwiches or salads at a higher average price of $3.60. The additional revenue for beverages and desserts is expected to increase to $230 each day. Because of the elimination of the entree, the cost of all cafeteria supplies is expected to decline to 50% of revenues. All other condition of operation would remain the same. Mayfair is willing to continue to subsidize this reduced operation but will not spend more than 20% of the current subsidy.

A proposal has been received from Wilco would pay Mayfair 4% of all revenues received able the breakeven point. This payment would be make at the end of the year. All other costs incurred by Wilco to supply the cafeteria services are variable and equal 75% of revenues. Wilco plans to charge $5.00 for an entree, and the average price for the sandwich or salad would be $4.00. All other daily sales are expected to average $300. Wilco expects daily sales of 66 entrees and 94 sandwiches or salads.

1. Determine whether the plan for downsizing the current cafeteria operation would be acceptable to Mayfair Corporation. Show your calculations.

2. Is the Wilco Foods proposal more advantageous to Mayfair Corporation than the downsizing plane? Show your calculations

Reference no: EM1334697

Discuss standard methods for developing leaders in industry

Discuss standard Methods for developing leaders in this industry. Why are they important to your chosen organization? Describe strategies for how industry leaders balance comp

Best way to segment an international market

In terms of international market segmentation, is transnational segmentation the same as disaggregate international consumer segmentation or two-stage segmentation (macro-s

Pacific express instigated operating as an airline

Pacific Express instigated operating as an airline in 1982. It had ways connecting western cities with Los Angeles as well as San Francisco and by the summer of 1983 was beg

Healthcare delivery in america

There can be no doubt that managed care has impacted everyone involved with healthcare delivery in America. What do you see as some of the most significant impacts of manage

Situation involving workplace violence

Describe a situation involving workplace violence that could be cited as a violation of the General Duty Clause. Explain where you would locate the four elements needed to p

Legal and ethical duties of corporate directions

Given a conflict between corporate stakeholders over a business decision, evaluate the legal and ethical duties of corporate directions, officers, and controlling shareholde

Showing discrete work tasks

A Work Breakdown Structure (WBS) and Gantt chart, developed as an MS Project file, showing discrete work tasks, grouped hierarchically in a way that helps to organize and de

For the university of phoenix class

For the University of phoenix class PHL/320 Critical Thinking and Decision Making in Businessin your own words of 75 words or more .....Please discuss the difference between D

Reviews

Write a Review

 
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd