Current Attempt in Progress Blue Spruce Cafeteria operates cafeteria food services in public buildings in the Midwest Blue Spruce is contemplating a major change in its cost structure. Currently, all of their cafeteria lines are staffed with hourly wage employees who hand serve the food to customers. Benson Riggs, Blue Spruce's owner, is considering replacing the employees with an automated self-service system. However, before making the change, Benson would like to know the consequences of the change, since the volume of business varies significantly from location to location, Shown below are the CVP income statements for each alternative. Personal Service System $2,690,000 Automated Self- Service System $2,690,000 1,076,000 Sales Variable costs 2,152,000 $538.000 $1,614,000 Contribution margin Fixed costs 134,500 1,210,500 Net Income $403,500 $403,500 (c) Using the margin of safety ratio, determine which alternative could sustain the greater decline in sales before operating at a loss. (Round answers to 2 decimal places, e.g. 0.25.) Automated Self-Service System Personal Service System 1 Margin of safety ratio could sustain the greater decline in sales before operating at a loss. Save for Later Attempts: 0 of 1 used Submit Answer
