Please bold answers QUESTION 3 Not yet answered Points out of 8.0o P Flag questi
ID: 2563376 • Letter: P
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Please bold answers
QUESTION 3 Not yet answered Points out of 8.0o P Flag 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 $1,400 and variable costs are $4 per meal. With a capacity of 750 meals per day, the restaurant serves an average of 700 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 $0.70 per meal if he accepted this offer. How do you think the owner arrived at the $0.70 figure? Current average cost per meal Per meal revenue from Girl Scouts Loss per meal (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 $4.80 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. Daily contribution from special order Daily opportunity cost Net advantage (disadvantage) Based on your above results, should the restaurant owner accept this offer? The restaurant owner should accept the offer The restuarant owner should not accept the offerExplanation / Answer
Answer to Part a)
Average Cost per Meal = Total Cost / Number of Meals
Total Cost = Fixed Cost + Variable Cost
Total Cost = $1,400 + ($4 * 700)
Total Cost = $1,400 + $2,800 = $4,200
Average Cost per Meal = 4,200 / 700
Average Cost per Meal = $6
Answer to Part b)
Per Meal Cost = $159
Number of Meals offered = 30
Per Meal Revenue from Girls Scouts = 159 / 30 = $5.30
Current Average Cost per Meal = $6
Loss per meal = $5.30 - $6
Loss per meal = $0.70
Answer to Part c)
Daily Contribution from Special Order = 300 * $4.80 = $1,440
Daily Opportunity Cost = $4 * 300 = $1,200
Net Advantage = $240
The Restaurant Owner should accept the offer, as it will result in Net Benefit of $240.