Reference no: EM132902357

Problem 1: Chow Foods operates a cafeteria for its employees. The operations of the cafeteria require fixed cost of P470,000 per month and variable costs of 40%of sales. Cafeteria sales are currently averaging P1,200.00 per month. The company has the opportunity to replace the cafeteria with vending machines. Gross customer spending at the vending machines is estimated to be 40% greater than the current sales because the vending machines are available at all hours. By replacing the cafeteria with vending machines, the company would receive 16% of the gross customer spending and avoid cafeteria costs. Ad decision to replace the cafeteria with vending machines will result in a monthly increase (decrease) in operating profit of