60.1K

Verified Solution

Link Copied!

Starcups Coffee Company is launching a new sustainability initiative that would reward customers for purchasing a revisable cup. During the cup promotion, customers would pay an extra $1.00 for the reusable cup and would recelve a 20 percent discount each time they return with the cup to buy a cup of coffee. Each week Starcups serves 43,000 customers, who purchase an average of 3,00 cups of coffee per week (129,000 cups totai). Starcups's contribution margin income statement for a typical week is shown below. Assume the new cup promotion is expected to impact sales volume, revenue, foed, and variable costs as follows: - Starcups estimates that 30 percent of its current customers (12,900) will participate in the promotion. The remainder of its existing customer bose (30,100) will continue to buy an average of 3.00 cups of cotfee per week. - Starcups expects to attract 5,300 new customers to participate in the promotion. - Customers who particlpate in the promotion will pay an addational $100 for the reusoble cup. They will then receive a 20 percent discount on repeat visits when they bring back their reusable cup. - The additional variable cost of purehosing the reusable cup is $2.30. The variable cost savings of the paper cup is $020 - Starcups expects that customers who participate in the reusable cup promotion wili visit an average of 4 times per week. including the first purchase of the reusable cup. - Starcups will spend a total of $13,000 per week advertising the reusable cup promotion. Rquired: 1. Prepare a contribution margin income stotoment to predict how the reusable cup promotion will impact weekly net operating income. 2. Compute the difference in total revenue, total variable costs, total contribution margin, total fixed costs, and total operating incom before and after the promotion. 3. How will this sustainability initiative impact the company's tiple bottom line? 1. Prepare a contribution margin income statement to predict how the reusable cup promotion will impact weekly net operating income. 2. Compute the difference in total revenue, total variable costs, total contribution margin, total fixed costs, and total operating incom before and after the promotion. 3. How will this sustainability initiative impact the company's triple bottom line? Complete this question by entering your answers in the tabs below. Prepare a contribution margin income statement to predict how the reusable cup promotion will impact weekly net operating income. Note: Round your per unit answers to 2 decimal places" at indicated place

Answer & Explanation Solved by verified expert

See Answer