Fernando\'s is a tiny sandwich shop just off the State University campus. Custom
ID: 2465217 • Letter: F
Question
Fernando's is a tiny sandwich shop just off the State University campus. Customers enter and place their orders at a small counter area. All orders are take-out because there is no space for dining in.
The owner of Fernando's, Luis Azaria, is attempting to construct a series of budgets. He has accumulated the following information:
Food costs are:
In a normal month when school is in session, Fernando's sells 5,000 sandwiches and 5,000 sodas. In October, State U holds its homecoming celebration. Luis figures that if he adds a noon shift on Saturday and Sunday of homecoming weekend, October sales will be 30% higher than normal. To advertise his noon shifts during homecoming weekend, Luis will buy cups emblazoned with the State U Homecoming schedule. This will add $200 to paper costs for the month. Last year, he added two additional shifts, and his sales goal was realized.
A. The average sandwich (which sells for $4.50) requires 1 roll, 4 ounces of meat, 2 ounces of cheese, 0.05 head of lettuce, 0.25 of a tomato, and a healthy squirt (1 ounce) of secret sauce. B. Each customer typically orders one soft drink (average price $1.50) consisting of a cup and 12 ounces of soda. Refills are free, but this offer is seldom taken advantage of because the typical customer carries out his/her sandwich and soda. C. Use of paper supplies (napkins, bag, sandwich wrap, cups) averages $1,650 per month. D. Fernando's is open for two 4-hour shifts. The noon shift on Monday through Friday requires two workers earning $10 per hour. The evening shift is only worked on Friday, Saturday, and Sunday nights. The two evening shift employees also earn $10 per hour. There are 4.3 weeks in a month. E. Rent is $575 per month. Other monthly cash expenses average $1,800.Explanation / Answer
3. Conceptual Connection: Do you think it was worthwhile for Luis to add the additional shifts for homecoming weekend last October?
Yes, it was worthwhile for Luis to add the additional shifts as the Total revenue has increased from $30000 in a normal school month to $39000 in October with an increase of $688 in labour costs as the labour costs have increased form $2752 to $3440.
So, the net benefits from aditional shifts are $9000 - $688 = $8312
With additional costs of $688, Luis has earned $9000 of additional revenues.
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