Question

E4-19. Special Order Nature's Garden, a new restaurant situated on a busy highway in Pomona, California, specializes in a chef's salad selling for $7. Daily fixed costs are $1.200, and variable costs are S4 per meal. With capacity of 800 meals per day, the restaurant serves an average of 750 meals each day. Required a. Determine the current average cost per meal. b. A busload of 30 Girl Scouts stops on its way home from the San Bernardino National Forest. The leader offers to bring them in if the scouts can all be served a meal for a total of S150. The owner refuses, saying he would lose $0.60 per meal if he accepted this offer. How do you think the owner arrived at the S0.60 figure? Comment on the owner's reasoning. A local businessman on a break overhears the conversation with the leader and offers the owner a one-year contract to feed 300 of the businessman's employees one meal each day at a special price of 54.50 per meal. Should the restaurant owner accept this offer? Why or why not?

Answer 1

Date = @ Fixed Cost 1200 Variable Cost 3000 Total Cost = 4200 Number of Meals : 750 Average Cost per Meal - 4200 750 = 5.60 meas 150 poico per Number of Meals offered = 30 Average Cost per Meals 5 Cost per Meal = 5.60 Cost per Meal offered = 0.10 5 Difference = 0.60 Daly Cabelulitan from Speal Order (300x4.50) = 1350 Dolly Opasturlty Cost (300 x 4) = 1200 150 Net Aduanlage