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Squeeze Me Inc., operates 25 bars in at Coast Hotels. The bars are typically staffed by on person and, historically, have been quite profitable. In
Squeeze Me Inc., operates 25 bars in at Coast Hotels. The bars are typically staffed by on person and, historically, have been quite profitable. In recent months, however, sales have fallen sharply because of increased competition.
please solve effect on profit for the month of JULY using incremental revenue and incremental profit
Table 1 Revenue and cost data, Squeeze Me Squeeze Me Inc., operates 25 bars in at Coast Hotels. The bars are typically staffed by on person and, historically, have been quite profitable. In recent months, however, sales have fallen sharply because of increased competition. For example, at the start of the year, the location in the Peabody Hotel had an average of 30 transactions per hour. In the most recent month, there were only 15 transactions per hour. The decline appears to be due to consumer reluctance to wait in line at Squeeze Me, since the opening, in late February, of two nearby competing bars. Ata recent staff meeting, Julia Steffano, CEO at Squeeze Me, made the following suggestion, "How about adding another staff person to the Peabody bar?" Then our customers won't be waiting in line and we can recover our lost business. Id be surprised if sales didn't get back to 30 transactions per hour, if we had two staffers working the bar. At the end of the meeting, Samuel Costello, company controller, volunteered to analyze the financial impact of increasing the staffing at the Peabody Hotel. Required: Using the revenue and cost data in the table, calculate the effect on profit of implementing Steffano's suggestion. Do you recommend staffing the Peabody Hotel location with two staffers? What alternative suggestions could improve the level of business? Discuss the benefits and disadvantages of the proposalStep by Step Solution
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