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

Questions Cloud

A country risk analysis : What is a country risk analysis?
Benefits of evidence-based policing : Discuss the advantages and disadvantages of evidence-based policing.
Case study on southwest airlines : Compile enough information for a case study on SouthWest Airlines.
Explain how might peterson draw on insights of new growth : Explain how might Peterson draw on the insights of new growth theory to draft a position statement ruling out unhindered immigration but proposing greater openness to "targeted immigrants".
Plan for downsizing the current cafeteria operation : Determine whether the plan for downsizing the current cafeteria operation would be acceptable to Mayfair Corporation. Show your calculations.
A mental model mindset : What is a mental model/mindset?
Locating the law review article : Locate two law review articles relevant to a topic of interest. For practice finding law review articles, locate the following article in Lexis and provide a synopsis of the article.
Staff meetings : An introduction to the department to corporate values and a description of the company culture
Discuss utility and demand theories : Discuss utility and demand theories

Reviews

Write a Review

 

Business Management Questions & Answers

  Find the smart strategy

Looking at Starbucks. As most people are aware, Starbucks regularly places multiple coffee shops in a close vicinity to one another, so you might see four Starbucks stores within a very narrow space.

  Describing situation conflict ended with a positive result

Describe a situation in which you believe conflict ended with a positive result.

  Medical devices-approval process and responsibility

What is the approval process to bring a medical device to market in the US?

  Business strategy

MGT 475 (02) - Business Strategy,  School of Business and Economics,  ICA - Project Guidelines

  Case study wallace corporation

Wallace Corporation was looking to hire a senior Administrative Assistant. After HR reviewed the applications of the various candidates, two were selected for personal interviews with the hiring manager.

  Traditional ecological knowledge

How do we honour traditional ecological knowledge (TEK) and at the same time bring traditional cultures into the 21st century? Conversely, how do traditional societies protect themselves from rampant consumerism?

  Calculate seasonal factors

Calculate seasonal factors Calculate seasonally-adjusted forecasts Specified Excel's multiple regression output, estimate Y

  Explaining individualism and collectivism affectivity

Define the following relationships: Individualism v collectivism affectivity

  Factors be minimized in collaborative leadership culture

What detracts from organizational members' willingness to collaborate? How can these detracting factors be minimized in a collaborative leadership culture?

  Current state of government regulation of product safety

From the first e-Activity, analyze the current state of the government regulation of product safety to determine whether the referenced agencies are generally proactive or reactive.

  The policies and actions that promote good strategy executio

Discuss the policies and actions that promote good strategy execution such as best practices, rewards and punishment.

  Recent fraud or corporate scandal report on ethics

What were the results? What are the limitations and significance of the data? What are ethical implications of data misuses in this case?

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