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Save Jorge's Comerspoc a popular university eatery in a competitive market, has seating and staff capacity to serve about 600 lunch customers every day.
Save Jorge's Comerspoc a popular university eatery in a competitive market, has seating and staff capacity to serve about 600 lunch customers every day. For the past two months, demand has fallen from its previous near-capacity level. Concerned about his declining profit, Jorge decided to take a closer look at his costs He concluded that food was the primary cost that varied with meals served, the remaining costs of $3,335 per day were fixed. With demand averaging 580 lunches per day for the past two months, Jorge thought it was reasonable to divide the $3,335 fixed costs by the cument average demand of 580 lunches to arrive at an estimate of $5.75 of support costs per meal served. Noting that his support costs per meal had now increased, he contemplated raising his meal prices. Requirements (a) What is likely to happen if Jorge continues to recompute his costs using the same approach if demand decreases further? (b) Advise Jorge on choosing a cost driver quantity for computing support costs per meal and explain why you advocate your choice of quantity Requirement (a) What is likely to happen if Jorge continues to recompute his costs using the same approach if demand decreases further? (Round to the nearest cent.) Jorge's previous average fixed cost per meal when demand was 600 lunch customers per day was $ same method to determine his costs of serving a meal, the average fixed cost per meal will If demand decreases further and Jorge continues to use the and Jorge will correct 0
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