Gavinis Caf is run by Alex and Lara Gavini. They usually run the business with three staff
Question:
Gavini’s Café is run by Alex and Lara Gavini. They usually run the business with three staff and this is sufficient when there are up to 30 customers in the café. When the bookings for an evening are higher than 30 customers, the Gavinis hire an extra staff member for each extra 10 customers they expect, up to the café’s limit of 90 customers. For example, if between 31 and 40 customers book for the evening, one extra staff member is employed. It costs the café $80 per staff member for an evening, not including the Gavinis.
Required
A. Determine the variable cost function for the extra staff employed to cater for customers’ numbers between 30 and 90 customers.
B. The Gavini’s would like to save some money and are considering employing extra staff at the rate of one for every 15 extra customers. What is the new cost function and what other qualitative factors should they consider in their decision?
Step by Step Answer:
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett