SWU Food and Beverage

Southwestern University (SWU), located 30 miles southwest of the Dallas/Fort Worth metroplex, has witnessed frightful growth in its football program. With that growth, fueled by the hiring of legendary animal trainer Bo Pitterno, has come more fame, the need for a bigger stadium, and more complaints astir(predicate) seating, place, long lines, and concession stand prices.Southwestern Universitys president, Dr. Marty Starr, was not only concerned to the highest degree the cost of expanding the existing stadium versus building a new stadium, except also about the ancillary activities. He wants to be sure that these respective(a) support activities generate receipts adequate to pay for themselves. Consequently, he wants the parking lots, game programs, and fodder service to all be handled as wampum centers. At a recent meeting discussing the new stadium, Starr told the stadium manager, Hank Maddux, to phrase a break-even chart and related data for to for each(prenominal) o ne one of the centers.He instructed Maddux to have the food service area break-even report localize for the next meeting. After parole with other facility managers and his subordinates, Maddux developed the table below. This table shows the expected percent of revenue by item, the suggested selling prices, and his estimate of variable costs.Selling Variable part ItemPrice/UnitCost/UnitRevenue Soft drink$1.50 $ .75 25% Coffee 2.00 .50 25% Hot dogs 2.00 .80 20% Hamburgers 2.50 1.00 20% Misc. snacks 1.00 .40 10%Madduxs stubborn costs are interesting. He estimated that the prorated mint of the stadium cost would be salaries for food services at $100,000 ($20,000 for each of the five home games) 2,400 square feet of stadium space at $2 per square foot per game and six people in each of the six booths for 5 hours at $7 an hour. These laid costs get out be proportionately allocated to each of the products based on percentages provided in the table. For example, the revenue from sof t drinks would be expected to cover 25% of the center fixed cost.Maddux wants to be sure that he has a number of things for President Starr 1, the total fixed cost that must be covered at each of the games. 2, the portion of the fixed cost that must be covered at each of the games/ 3, what his unit gross revenue would be at break-even for each items- that is, what sales of soft drinks, coffee, hot dogs, and hamburgers are necessary to cover the portion of the fixed cost allocated to each of these items. 4, what the dollar sales for each of these would be at these break-even points, and 5, realistic sales estimates per attendee for attendance of 60,000 and 35,000 (in other words, he wants to hump how many dollars each atendee is spending on food at his intercommunicate break-even sales at present and if attendance grows to 60,000).He felt this last act of cultivation would be helpful to understand how realistic the assumptions of his model are, and this information could be comp ared with similar figures from previous seasons.DISCUSSION QUESTIONPrepare the report with the items noted so it is ready for Dr. Starr at the next meeting.