Annie's Homemade Ice Cream is considering starting a Fan Club to grow its revenues, particularly...

70.2K

Verified Solution

Question

Accounting

Annie's Homemade Ice Cream is considering starting a Fan Club to grow its revenues, particularly during the winter months. Each member of the Fan Club would pay a monthly fee to obtain the following benefits: One free t -shirt received at the time of enrollment. Each t -shirt costs Annie's 9.00. One free ice cream flight per month. Each flight consists of two-ounce servings of four flavors. Annie's cost per flight is1.60. Eligibility to spin the prize wheel after each increment of 12 servings purchased. Annie's estimates each member will buy four servings of ice cream per month; therefore, being eligible to spin the prize wheel once every three months, or four times a year. The average cost of each prize awarded when a fan club member spins the prize wheel is 5.00. In addition, Annie's uses1.00 per member per month to "buy" ice cream for 5.00 per serving. The company then donates the ice cream purchased by fan club members to community organizations such as Big Brothers/Big Sisters, public schools, and first responders. Annie's cost per pre-packaged, donated serving is1.40. Annie's estimates customers who are not members of the fan club buy two servings of ice cream per month, whereas the fan club's benefits motivate loyal members to buy four servings per month. The price per serving and ingredient cost per serving are 5.00 and1.20, respectively. The company is asking your recommendation whether it should charge members 12 per month (or144 for an annual membership) or 10 per month (or120 for an annual membership). Required: Calculate the incremental revenue per member, per year under both pricing scenarios by completing the following table: In addition, Annie's uses 1.00 per member per month to "buy" ice cream for5.00 per serving. On an annual basis, this means each member contributes 12 that "buys" 2.4 servings of ice cream per year. The company then donates the ice cream purchased by fan club members to community organizations such as Big Brothers/Big Sisters, public schools, and first responders. Annie's cost per pre-packaged, donated serving is140. Calculate the incremental expense per member, per year by completing the following table: Calculate the incremental profit per member, per year under both pricing scenarios by completing the following table: If Annie's could attract 95 fan club members at a price of 12 per month or 100 members at a price of10 per month, how much additional profit (loss) does the 12 price provide when compared to the10 price? If Annie's could attract 100 members at a price 10 per month, what is the fewest number of members the company could enroll at12 per month and still earn higher profits than the 10 scenario? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Calculate the incremental revenue per member, per year under both pricing scenarios by completing the following table: Hint: Fan Club members buy two additional servings per month compared to non-member customers. [[Per Member per Year:,[[10 per Month],[Scenario]],[[12 per Month],[Scenario]]],[Membership dues received,,],[Loyalty revenue*,,],[Total incremental revenue,0.00,0.00]]

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students