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Special Order

Denny's, just off the San Bernardino Freeway in Pomona, California, specializes in a Super Slam breakfast selling for $$7.$ Assume daily fixed costs are $$1,575,$ and variable costs are $$5$ 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.

$Answer

$($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 $$195.$ The owner refuses, saying he would lose $$0\mathrm{.}75$ per meal if he accepted this offer. How do you think the owner arrived at the $$0\mathrm{.}75$ figure?

Current average cost per meal Answer

Per meal revenue from Girl Scouts Answer

Loss per meal Answer

$($c$.)$ A local businessman on a break overhears the conversation with the leader and offers the owners a one$-$year contract to feed $100$ of the businessman's employees one meal each day at a special price of $$5\mathrm{.}50$ 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 Answer

Daily opportunity cost Answer

Net advantage $($disadvantage$)$ Answer

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

The restaurant owner should accept the offer.

The restaurant owner should not accept the offer.

Answer & Explanation Solved by verified expert

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