Annual cost of supplies from above or 91 total costs

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Chapter 18 / Exercise 1
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Annual cost of supplies (from above or $300,560 52%) 156,291 Total costs 325,791 Annual revenue 300,560 Mayfair downsizing plan subsidy $ 25,231 Under current cafeteria plan Annual revenues: ($720 + $405 + $300)*260 [(100 entrees $7.20) + (90 salads/sandwiches $4.50) + $300 beverages/dessert] 260 days $370,500 Cost of supplies (62% $370,500) $229,710 Computation of subsidy limitation Current operation: Wages and fringe benefits [$155,000 + (25% $155,000)] $193,750 Utilities and equipment maintenance 52,000 Cost of supplies (from above or $370,500 62%) 229,710 Total costs 475,460 Annual revenue 370,500 Mayfair current operations subsidy $104,960 Mayfair Corporation’s subsidy limitation 20% of current subsidy (20% $104,960) $ 20,992
(b) 2. The Wilco Foods proposal is more advantageous to Mayfair Corporation than the downsizing plan and the current operations. The subsidy at the projected volume is $11,128. The calculations follow (see next page):
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Chapter 18 / Exercise 1
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MGT 3131 MCS / Fall 2015 / Case Assignment #5 / 10 November 2015 Number: ____
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