Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Required information Skip to question [The following information applies to the questions displayed below.] Each of the following situations is independent: Special-Order Pricing Barrys Bar-B-Que

Required information

Skip to question

[The following information applies to the questions displayed below.]

Each of the following situations is independent:

Special-Order Pricing Barrys Bar-B-Que is a popular lunch-time spot. Barry is conscientious about the quality of his meals, and he has a regular crowd of 400 patrons for his $10.70 lunch. His variable cost for each meal is about $3.30, and he figures his fixed costs, on a daily basis, are about $2,500. From time to time, bus-tour groups with 50 patrons stop by. He has welcomed them because he has capacity to seat 500 diners in the average lunch period, and his cooking and wait staff can easily handle the additional load. The tour operator generally pays for the entire group on a single check to save the wait staff and cashier the additional time. Due to competitive conditions in the tour business, the operator is now asking Barry to lower the price to $4.80 per meal for each of the 50 bus-tour members. (Negative amounts should be indicated by a minus sign. Round your answers to 2 decimal places.)

Required:

1-a. What is the incremental profit (loss) per bus-tour meal?

1-b. Should Barry accept the bus-tour offer?

2-a. What is the incremental profit (loss) for each meal if the tour company were willing to guarantee 200 patrons (or four bus loads) at least once a month for $4.10 per meal?

2-b. Is the offer financially attractive?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Applications Of Accounting Information Systems

Authors: David M. Shapiro

1st Edition

194999158X, 9781949991581

More Books

Students also viewed these Accounting questions

Question

=+e) Find the P-value using the degrees of freedom from part d.

Answered: 1 week ago

Question

identify the classifications of interventions;

Answered: 1 week ago