Question

Lance's Diner has a hot-lunch special each weekday and Sunday afternoon. The cost of food and other variable costs for each meal served is $4.30; weekly fixed costs (e.g., building depreciation and equipment rental costs) are $6,600, regardless of how many days the diner is open per week. Lance has an average of 800 customers per day. a. What is the lowest price in total (not per meal) that Lance should charge for a special group of 500 that wants to come on Saturday for a family reunion? b. What should be the lowest price per meal that Lance should charge for the hot-lunch special served on weekdays and Sunday afternoons? (Round "Lowest price per meal" answer to 2 decimal places.) a. owest price in total Lowest price b. per meal

Answer 1

A) Lowest price in total

= the hotel atleast has to cover the variable cost from this additional serving

= 500 * 4.30

= 2150

B) Lowest price

No of customers stepping in per month = 800 per day * 6 days a week = 4,800

= Variable cost + Fixed cost per customer

= 4.30 + (6,600/4,800)

= 5.68

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I have rounded some numbers.

Comment if you face any issues