Hit-n-run inc. owns and operates 10 food trucks (mobile kitchens) throughout metropolitan los angeles. each food truck has a different food theme, such as irish-mexican fusion, traditional mexican street food, ethiopian cuisine, and lebanese-italian fusion. the company was founded three years ago by juanita o’brien when she opened a single food truck with a unique menu. as her business has grown, she has become concerned about her ability to manage and control the business. o’brien describes how the company was built, its key success factors, and its recent growth.

"i built the company from the ground up. in the beginning it was just me. i drove the truck, set the menu, bought the ingredients, prepared the meals, served the meals, cleaned the kitchen, and maintained the equipment. i made unique meals from quality ingredients, and didn’t serve anything that wasn’t perfect. i changed my location daily, and notified customers of my location via twitter.

P8-4b dropping unfavorable division based on the following analysis of last year's operations of groves, inc., a financial vice president of the company believes that the firm's total net income could be increased by $160,000 if its design division were discontinued. (amounts are given in the thousands of dollars.) required provide answers for each of the following independent situations: a. assuming that total fixed costs and expenses would not be affected by discontinuing the design division, prepare an analysis showing why you agree or disagree with the vice president. b. assume that the discontinuance of the design division will enable the company to avoid 30% of the fixed portion of cost of services and 40% of the fixed operating expenses allocated to the design division. calculate the resulting effect on net income. c. assume that in addition to the cost avoidance in requirement (b), the capacity released by discontinuance of the design division can be used to provide 6,000 new services that would have a variable cost per service of $60 and would require additional fixed costs totaling $68,000. at what unit price must the new service be sold if groves is to increase its total net income by $180,000?