Question

12. The Johnson Buffet offers an all-you-can-eat buffet meal for $28 per person. The restaurant employs ten salaried employees. Rent for the building employee salaries, and other fixed costs for the restaurant are $67,500 per month when the restaurant serves meals up to 14,200 guests in that month. If the restaurant were to serve more than 14,200 guests in any given month, it would need to hire two additional servers and two additional kitchen staff for an additional fixed cost of $18,000 per month. The variable cost of food is $20 per guest. Read the requirements! Requirement 1. What is the restaurant's cost equation for estimating costs if the number of guests to be served is up to 14,200 guests per month? y = $ x + $ Requirement 2a. If the restaurant were to serve 13,500 guests in May, what would be the estimated total cost (Use the cost equation from Requirement 1.) If the restaurant were to serve 13,500 guests in May, the estimated total cost would be $ Requirement 2b. If the restaurant were to serve 13,500 guests in May, what would be the average cost per guest? If the restaurant were to serve 13,500 guests in May, the average cost per guest would be $ L Requirement 3a. If the restaurant were to serve 12,300 guests in June, what would be the estimated total cost using the cost equation from Requirement 1? If the restaurant were to serve 12.300 guests in June, the estimated total cost using the cost equation from Requirement 1 would be $ Requirement 3b. If the restaurant were to serve 12,300 guests in June, what would be the estimated total cost using the average per guest cost from Requirement 2b? If the restaurant were to serve 12,300 guests in June, the estimated total cost using the average cost per guest from Requirement 2b would be $ Requirement 3c. Why is there a difference in the two cost estimates? as volume There is a difference in the two cost estimates because the average cost per guest (1) - changes, due to the (2) of the buffet's costs. The fixed cost per unit (3) - decreases, while the variable cost per unit (4) - as volume Requirement 4. What is the restaurant's cost equation for estimating costs if the number of guests to be served is more than 14,200 guests per month? y = $ x + $ Requirement 5. If the restaurant were to serve 15,700 guests in July, what would be the estimated total cost? (Use the cost equation from Requirement 4.) If the restaurant were to serve 15.700 guests in July, the estimated total cost using the cost equation from Requirement 4 would be $

Answer 1

1	y=20x+67500
2a.	x=Number of guests=13500
	Total cost,y=(20*13500)+67500=$ 337500
2b.	Average cost per guest=Total cost/Number of guests=337500/13500=$ 25 per guest
3a.	x=Number of guests=12300
	Total cost,y=(20*12300)+67500=$ 313500
3b.	Total cost=Number of guests*Average cost per guest=12300*25=$ 307500
3c.	There is a difference in the two cost estimates because the average cost per guest changes as volume changes, due to the fixed portion of the buffet's costs.
	The fixed cost per unit increases as volume decreases,while the variable cost per unit remain same.
4	Fixed costs=67500+18000=$ 85500
	y=20x+85500
5	x=Number of guests=15700
	Total cost,y=(20*15700)+85500=$ 399500