4. The School Lounge has been reporting losses in past months. In July, for example, the loss was $5000. (Answer page 6&7 font size 10) (Marks 6) $70 000 Revenue Expenses Purchases of prepared food Serving personnel Cashier Administration University surcharge Utilities $ 21 000 30 000 5 500 10 000 7 000 1 500 Loss 75 000 S (5000) The Lounge purchases prepared food directly from University Food Services. This charge varies proportionately with the number and kind of meals served. Personnel who are paid by the Lounge serve the food, tend the cash register, waiting and clean tables, and wash dishes. The staffing levels in the Lounge rarely change; the existing staff can usually handle daily fluctuations in volume. Administrative costs are primarily the salaries of the Lounge manager and her office staff. The university charges the Lounge a surcharge of 10 per cent of its revenue. Utility costs are the costs of cooling, heating, and lighting the Lounge during its normal operating hours. The university's management is considering shutting the Lounge down because it has been operating at a loss. Required (a) List the fixed expenses of the Lounge. (b) List the variable expenses of the Lounge and the most likely cost driver for each expense. (c) Write out the cost function for running the Lounge. (a) Estimate the profit or loss for August if the revenues of the Lounge increase to $80 000