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  • Mead Meals Case Solution Part II

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    The document discusses solutions to problems for a meals on wheels center. New equipment would allow serving 800 more meals per day, generating $12800 extra weekly revenue from the additional 400 people fed. While food costs for those extra meals would be $9300 per week, the new equipment would provide $3500 extra in weekly cash flow. A capital budget analysis shows that purchasing the equipment for $625,000 would have a positive net present value when considered over different time periods. The revised annual budget with the new equipment is presented, showing an annual profit of $280,500.

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    The document discusses solutions to problems for a meals on wheels center. New equipment would allow serving 800 more meals per day, generating $12800 extra weekly revenue from the additional 400 people fed. While food costs for those extra meals would be $9300 per week, the new equipment would provide $3500 extra in weekly cash flow. A capital budget analysis shows that purchasing the equipment for $625,000 would have a positive net present value when considered over different time periods. The revised annual budget with the new equipment is presented, showing an annual profit of $280,500.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Als XLS, PDF, TXT herunterladen oder online auf Scribd lesen
    Markieren Sie unangemessene Inhalte
    963 Ansichten2 Seiten

    Mead Meals Case Solution Part II

    Hochgeladen von

    utopiayet7
    The document discusses solutions to problems for a meals on wheels center. New equipment would allow serving 800 more meals per day, generating $12800 extra weekly revenue from the additional 400 people fed. While food costs for those extra meals would be $9300 per week, the new equipment would provide $3500 extra in weekly cash flow. A capital budget analysis shows that purchasing the equipment for $625,000 would have a positive net present value when considered over different time periods. The revised annual budget with the new equipment is presented, showing an annual profit of $280,500.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Als XLS, PDF, TXT herunterladen oder online auf Scribd lesen
    Markieren Sie unangemessene Inhalte
    von 2

    CASE STUDY: MEAD MEALS ON WHEELS CENTER - PART II *

    PROBLEM 3 SOLUTION
    Equipment allows 10,400 meals, an increase of 800 over the existing situation.
    800 meals translates to 400 more people fed per day.
    Revenue is $32 per person fed each week
    12800 extra revenue
    Food will cost $24.50 - $1.25 = $23.25 per person
    9300 extra food cost
    Extra weekly cash flow due to equipment:
    3500 extra weekly cash flow

    nper
    Capital Budget Analysis
    PV of Equipment Purchase
    Periodic Revenue from New Equipment
    Periodic Interest Rate
    Present Value of Benefit from Equipment
    Net Present Value

    260

    20

    Weekly
    $625,000
    $3,500
    0.23%
    $683,727
    $58,727

    Quarterly
    $625,000
    $45,500
    3.00%
    $676,925
    $51,925

    Annual
    $625,000
    $182,000
    12.00%
    $656,069
    $31,069

    Revised Budget
    Quarter
    Quarter
    One
    Two
    $2,163,200
    $2,163,200
    $520,000
    $442,000
    18,750
    18,750
    28,125
    28,125
    1,571,700
    1,571,700
    $2,138,575
    $2,060,575
    $24,625
    $102,625

    Quarter
    Three
    $2,163,200
    $455,000
    18,750
    28,125
    1,571,700
    $2,073,575
    $89,625

    PROBLEM 4 SOLUTION

    Revenue
    Fixed Costs
    Interest Expense
    Additional Depreciation
    Variable Food Costs
    Total Cost
    Profit/(Loss)

    Quarter
    Four
    $2,163,200
    $481,000
    18,750
    28,125
    1,571,700
    $2,099,575
    $63,625

    Annual
    Total
    $8,652,800
    $1,898,000
    $75,000
    $112,500
    $6,286,800
    $8,372,300
    $280,500

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