1. Taste Good Steam Boat Restaurant (TGSBR) operates and runs a group of steam boat restaurant in the Klang valley. Below are monthly operating costs and customers(Q) data for the last four months:

Month Customers Total Operating Costs (RM)

January 2,400 RM 80,000

February 3,800 RM 90,000

March 2,600 RM 83,000

April 1,800 RM 74,000

A. Using Hi-Lo method, calculate TGSBR variable costs per customer, total fixed cost per month and formulate TGSBR total costs equation. (5 marks)

Your answer

B. TGSBR currently charge $35 per customer. Forecast customer sales for the next few months will maintain at the 2,000 customers level due to competition. If number of customers remain at 2,000 customers per month, calculate TGSBR monthly income/(loses). (2 marks)

Your answer

C. Assuming TGSBR has very high fixed operating costs and low variable operating cost, would you recommend TGSBR to reduce the price per customer to increase the number of customers in the future? Explain from the cost behavior perspective. (3 marks