"I think I can buy it at a great price, said Dan Flood. He was talking about the Watershed Restaurant. The property was for sale and Dan was meeting with Loralei Glenn, his friend and an experienced restaurant manager. Its losing about 7 cents on each dollar sale now, continued Dan, but I know we can turn that around. Loralei considered Dans proposal that they form a partnership, acquire the restaurant, and share in the profits they planned to make. She knew that, before it was possible to share profits, they would actually have to make a profit. That meant, to go from losing 7 cents per dollar to making money, they would have to increase sales, reduce costs, or both. She mentioned that to Dan. Well, he replied, Im not sure we need to increase the sales at all. If we buy at the right price, I think we just need to reduce our costs. You can do that! Assume that the restaurants sales volume last year was approximately $1,400,000, and thus its loss for the year was about $98,000.

3. Consider the decisions Dan and Loralei will make if they choose to acquire the restaurant. While clearly both are important, whose decisions do you think are the most important to ensuring the future profitability of the Watershed? Why do you think so?