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Question 4 - (Total 25 marks) Duck and Waffle is a British restaurant which provides highest 24 hours dining services for customers. The costs of
Question 4 - (Total 25 marks) Duck and Waffle is a British restaurant which provides highest 24 hours dining services for customers. The costs of daily operations, which have capacity for 120 customers are as follows: Direct materials per customer 20 Direct labour per customer 15 Fixed overheads per day 4,800 For next day's operation, 60 seats have been booked at a standard-class fare of 130 each. You are required to: a. Calculate the total cost per customer on next day with 60 seats booked (2 marks) b. Calculate the marginal cost per customer (2 marks) C. Calculate the profit or loss if no further seats are booked for next day (4 marks) d. Advise the marketing manager for the considerations below, explain your reasoning, and show your answer with income statements (11 marks). The marketing manager thinks it unlikely that any further standard-class seats will be booked. There are two possibilities that he must consider: To release the remaining seats to an agent that sells cheap deals: the company will receive 55 for each seat booked and, from past experience, 45 seats are expected to be booked. To sell all 60 spare seats to a local club, which will offer them as prizes for a competition: the club will pay 40 per seat e. Explain what is cost behavior, list and explain any two types of costs (6 marks)
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