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Carreras Caf is a Spanish restaurant in a college town. The owner expects that the number of meals served in June illbe 30 percent below
Carreras Caf is a Spanish restaurant in a college town. The owner expects that the number of meals served in June illbe 30 percent below those served in May because so many students leave for the summer. In May, the restaurant served 4,700 meals at an average price of $20. In the summer (June through August), the average price of a meal typically increases by 35 percent and the average food cost of a meal increases by 20 percent. Other costs are typically unchanged during the summer. The following cost information is available for May Service costs (variable with respect to meals) Variable service costs (with respect to meals) Food costs Labor Other variable costs Fixed service costs $10,400 16,900 6,400 8,800 $42,500 Total service costs Marketing and administrative costs Marketing (variable with respect to meals) Administrative (fixed) 6,000 4,800 10,800 $53,300 Total marketing and administrative costs Total costs
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