Question
Dot's Restaurant must decide between two technology processes in their kitchen. They only serve dinner after 4 p.m. on a small island called Sanibel. The
Dot's Restaurant must decide between two technology processes in their kitchen. They only serve dinner after 4 p.m. on a small island called Sanibel. The restaurant is open 250 days per year. Dot and her husband, Ham, are retired. They became bored playing golf five times a week and decided to open this boutique restaurant. Process A uses an induction oven and microwave process with a fixed cost of $40,000 and a variable cost of $4.21 per meal. Process B uses a gas fired oven process with heating lamps with a fixed cost of $20,000 and a variable cost of $5.54 per meal. Process A speeds up cooking and delivery time. The average selling price per meal is $31.21.
- What is the break-even quantity? Round your answer to the nearest whole number.
- If the restaurant manager expects to sell 9,000 meals, which option, A or B, is best? Round your answers the nearest dollar.
- Is the restaurant profitable if they purchase the process option you recommend in part (b)? Enter your answer as a positive value. Round your answer to the nearest dollar.
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