3.

Gene Monte is the president of the five-unit El Ray Taqueria chain of restaurants. His

quick service operations offer both dine-in and carry-out (drive through) service.Gene is considering keeping his operations open one additional hour per night. Based on his revenue estimates, the following data represent the incremental sales he believes he will achieve in each of his restaurants:

Unit Number

Additional Revenue

1

$850

2

$700

3

$650

4

$750

5

$900

Assume Gene's product cost is 30% and all other variable costs equal 45% of sales.

a) What is the additional amount, per unit, that Gene could contribute to his fixed costs by extending his operating schedule by the additional hour?

b)What is the total amount of contribution to fixed costs he would achieve?

c) What additional factors should Gene take into account before implementing the extended schedule?