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What would be the additional subsidy needed

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Question - Meals2Home delivers hot meals to seniors Mon-Fri. They charge $16 per meal for the service which has variable costs of $25 per delivery. Because they sub-contract both the preparation and delivery of meals, there are no fixed costs. They receive a subsidy of $9,285 per month so long as they reach a minimum number of homes, and they plan on only breaking even each month. The city decides this is a great service, but would like to double the number of homes reached and only charge $10 per meal. Servicing this number of homes would also require a full-time employee at a cost of $4,000 per month. What would be the additional subsidy needed to achieve these goals and still breakeven?

Reference no: EM133090976

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