Question

The Organic Buffet offers an​ all-you-can-eat buffet meal for $ 34 per person. The restaurant employs ten salaried employees. Rent for the​ building, employee​ salaries, and other fixed costs for the restaurant are $ 118 comma 800 per month when the restaurant serves meals up to 13 comma 900 guests in that month. If the restaurant were to serve more than 13 comma 900 guests in any given​ month, it would need to hire two additional servers and two additional kitchen staff for an additional fixed cost of $ 27 comma 000 per month. The variable cost of food is $ 20 per guest. Read the requirementsLOADING.... Requirement 1. What is the​ restaurant's cost equation for estimating costs if the number of guests to be served is up to 13 comma 900 guests per​ month? y = $ x + $

1.	What is the​ restaurant's cost equation for estimating costs if the number of guests to be served is up to 13 comma 90013,900 guests per​ month?
2.	If the restaurant were to serve 13 comma 20013,200 guests in MayMay​, what would be​ the:
	a.	Estimated total​ cost? (Use the cost equation from Requirement​ 1.)
	b.	Average cost per​ guest?
3.	If the restaurant were to serve 11 comma 40011,400 guests in JuneJune​, what would be​ the:
	a.	Estimated total cost using the cost equation from Requirement​ 1?
	b.	Estimated total cost using the average per guest cost from Requirement​ 2b?
	c.	Why is there a difference in the two cost​ estimates?
4.	What is the​ restaurant's cost equation for estimating costs if the number of guests to be served is more than 13 comma 90013,900 guests per​ month?
5.	If the restaurant were to serve 15 comma 40015,400 guests in JulyJuly​, what would be the estimated total​ cost? (Use the cost equation from Requirement​ 4.)

Answer 1

Answer is giving below

1 Y= $20X + $118,800 X=number of guests 2 Estimated total cost for 13,200 guests U= $20 * 13,200+ $118,800 $382,800 Average cost per guest $29.00 ($382,800/13,200) 3 Estimated total cost for 11,400 guests a) U= $20 * 11,400+ $118,800 $346,800 b) Estimated total cost using average cost $330,600 (11400*$29) c) The reason for difference is fixed cost. The fixed cost remains same at overall level Hence fixed cost cannot be average out at one level of output and applied to another level of output As output decreases fixed cost per unit will increase 4 Restaurant's cost equation for estimating costs if guest are more than 13,900 Y= $20X + $145,800 Revised fixed cost = $118,800 + $27,000 = $145,800 5 Y= $20x + $145,800 Total cost for serving 15,400 guests $453,800 Y=$20*15,400 + $145,800