Student’s Name
Institution Affiliation
Acme Widget Company
To: Winnie Widget
From: Finance Manager
Date: 7th January 6, 2017
Re: The Best Alternative in Provision of Snacks and Soda for Employees
The work activity at Acme Widget Company is strenuous, tedious, and requires an employee to have a lot of energy. As a result, must employees would require the company to provide them with means through which they can purchase snacks and other beverages. My department, the finance department has taken the task to evaluate the various alternative solutions to solve this problem.
In our assessment of the available solutions to this problem, we used data from Vendor Queen Limited and Superior Sodas Limited to determine the most cost-effective and reliable service provider. The cost classification was divided into two categories, installation costs incurred in the supply of the snacks and sodas, which would be paid by the company, and costs for the sale of soda and snacks to customers.
In Queen Limited, the installation cost for soda per month is $30 while the installation cost for snacks is $60. The cost per soda is $2 and the total cost that all employees will pay in a month is $600. The cost of snacks is $1.75 and the total cost of snacks for all employees is $420. In Superior Soda Limited, the installation cost of soda is $50, the cost per soda is $1.5 and the employees will consume sodas that cost $450 per month. Unfortunately, the company will not provide snacks for our employees since they are less than the company’s minimum required number of customers.
Using the above situation, Queen Limited provides the best conditions for our employees. Although the company will incur a high installation cost per month, of $90 instead of $50, employees will be able to have the option of buying snacks. However, these employees will also pay $0.5 more at Queen Limited per bottle of soda than what is charged by Superior Soda Limited. The company will save $20 in soda installation cost since Queen Limited charges $30 for soda installation while Superior Soda Limited charges $50.
Table 1

Details Soda Cost Snack Cost Total Soda Cost Snack Cost
Insatllation 30 60 90 50 N/A 50
Cost per unit 2 1.75 1.5 N/A
Total Cost 600 420 1020 450 N/A 450
Net Cost 1070 500

Another alternative is the company hiring a snack dispenser from Superior Soda Limited. In this scenario, the company will lease the snack dispenser for $225 per month. The company will also purchase each snack at $0.95 from Superior Soda Limited and sell them for $1.5 or more. The company will be required to purchase 240 snacks a month to satisfy the demand, which will cost $228. If the company sells these snacks at $1.5, it will have a revenue of $360. As a result, it will make a total loss of $108. In order, for the company to break even, it will have to sell its snacks for at least $1.8875 {(225+228)/2= 1.8875}. Given that the main objective of the company is not to make profits from the sale of snacks, it should lease the dispenser on a monthly basis and charge $1.8875 per snack. As a result, the out of pocket cost that the company will incur is the $50, which is used in the installation cost of the soda dispenser. Moreover, this method will ensure that the company supplies its employees with high-quality products (soda and snacks) at a low cost. Alternatively, the company can charge the snacks $2.10 per piece. This price will cater for the lease charges for the snack dispenser and the installation cost of the soda dispenser. Therefore, the company will not have any out of pocket cost. Using this method, the total cost of soda and snack will be cheaper for its employees than what is charged by Queen Limited. However, the cost of soda will be slightly higher than Queen’s. Therefore, the best solution for Acme Widget Company is to purchase soda from Superior Soda Limited and to lease a snack dispenser from the same company.
Table 2

Details Cost
Lease of Snack Dispenser 225
Snacks Sold Per Month 240
Cost per Snack 0.95
Total Cost of Snacks 228
Total Cost of Snacks and Lease 453
Selling Price to Break Even on Snacks 1.8875
Soda dispenser Installation Cost 50
Total Cost including Soda Dispenser Installation cost 503
Total Snack cost to avoid out of Pocket Cost 2.09583333

            When making a decision on the provision of products for employees, a business should look at both the cash and non-cash factors (Dessler, 2016; Mathis & Jackson, 2010). In this situation, Acme Widget Company main objective is not making money through the snack and soda business, rather, it aims at providing its employees with a conducive working environment. In light of this, the decision to lease a snack dispenser from Superior soda limited and to purchase soda from the same company aims at ensuring that its employees are able to access adequate meals at a low cost.
Dessler, G. (2016). Human resource management (15th Ed.). Upper Saddle River, NJ: Pearson Publishers.
Mathis, R., & Jackson, J. (2010). Human resource management (13th Ed.). Manson, OH: South-Western Cengage Learning.