A catering service has been asked to provide a lunch buffet the next day for 40 people at a set price of $10.50 per person; no function has been booked for the next two days. The catering service has fixed costs of $150 a day, or $54,750 per operating year, and it operates with a variable cost of 65% of sales revenue. Calculate the operating income from the function and justify your decision to accept or not accept the booking.

LO1