A new restaurant situated on a highway in specializes in a chef\'s salad selling

Question

A new restaurant situated on a highway in 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.

Based on your above results, should the restaurant owner accept this offer?

Explanation / Answer

a Particulars Calculation Variable cost for 500 Meals @ $ 4 500 X4         2,000 Fixed cost given         1,100 Total Cost         3,100 Number of Meals given            500 Current average cos per Meal $3,100/500 Meals           6.20 b Offer for 30 Meals 159 Current average cost per meal $6.20 Per meal revenue from Girl Scouts 159/30 $5.30 Loss per meal $6.20 - $5.30 $0.90 Particulars Calculation Revenue from 300 meals @5.1 300 X 5.1          1,530 Variable cost for 300 Meals @ $ 4 300 X 4          1,200 Daily contribution from special order 330 Revenue from 300 meals @7 300 X 7          2,100 Daily opportunity cost 2100-1200 900 Net Disadvanage -570

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