Average Check, Trends

The fixed cost of the banquet department of a hotel is CHF 400 a day. A customer selected a menu for 125 persons that would have a variable food cost of CHF 5.50 per person, a variable wage cost of CHF 3.75 per person, and other variable cost of CHF 0.75.per person.

a) Calculate the total cost per person if this banquet were booked. b) What should be the total selling price (sales revenue) and price per person if a 25% operating income on sales revenue is wanted? c) The customer does not want to pay more than CHF 13.25 per person for this function. She is a good customer; she has booked many functions in the banquet room in the past and is expected to do so in the future. The function is in three days from now, and there is no likelihood you will be able to book the room for any other function. Explain why you would, or would not, accept the CHF 13.25 per-person price.