Special Order Nature\'s Garden, a new restaurant situated on a busy highway in P
ID: 2539875 • Letter: S
Question
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 $1,100, and variable costs are $4 per meal. With a capacity of 550 meals per day, the restaurant serves an average of 500 meals each day.
(a.) Determine the current average cost per meal. Round your answer to two decimal places.
(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 $159. The owner refuses, saying he would lose $0.90 per meal if he accepted this offer. How do you think the owner arrived at the $0.90 figure?
(c.) A local businessman on a break overhears the conversation with the leader and offers the owners a one-year contract to feed 300 of the businessman's employees one meal each day at a special price of $5.10 per meal.
Compute the net advantage (disadvantage) of accepting the contract.
Only use a negative sign with your answer to indicate a net disadvantage. Otherwise, do not use negative signs with answers.
Explanation / Answer
A) current average cost per meal-4*500+1100/500 meals
-$3100(fixed cost+variable cost)/500 meals
=$6.20 per meal
B) per meal revenue from girl scouts-$159/30 girls
-$5.30 per meal
current average cost per meal-$5.30+$.90
-$6.20 per meal
loss per meal-$5.30=$6.20=$.90 per meal
the owner arrives at this figure .90 by comparing the expected revenue$5.30 from the offer with the expected cost$6.20 of ythe meal.
C)
Daily contribution from special order-sales - variable cost
1530-1200
(5.10*300)-(4*300)
=$330
daily opportunity cost(cost of next best alternative)-$7-$5.10
-$1.90 per meal
Daily contribution from special order-sales - variable cost
1530-1200
(5.10*300)-(4*300)
=$330
daily opportunity cost(cost of next best alternative)-$7-$5.10
-$1.90 per meal
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.