Suppose you are asked to estimate the cost of hosting the NCAA Final Four Tournament in your city. During the last tournament that you hosted there were issues providing enough "hot grilled items" like hot dogs, chicken sandwiches or burgers at the arena. (To make it easier these will be referred to as "one unit sandwiches"). In order to improve the fan experience you want to address those issues. During a typical college game, the arena can handle the volume, but during large capacity events the "one unit sandwiches" are made in the dining halls in advance and transported to the arena in heating units to be sold. There are not enough grills in the arena to handle big events. To address these issues you are considering purchasing an additional grill for the main concession area. You expect to save $.35 in direct labor per sandwich by providing the grills. The burden on labor saved is 45%, cost for set-up for each game is $50, interest rate is 17%, your allowances for taxes and insurance is 10%, depreciation and obsolescence is 100% and the allowance for maintenance is 25%. The cost of the grill is $4500. If you want to pay for the grill over the course of the 4 games (tournament weekend), how many pieces must be made for the fixture to pay for itself? If the arena has the capacity for 18,000 people and 40% purchase a sandwich, Is the answer from part "a" a reasonable expectation? Explain why. Suppose you are asked to estimate the cost of hosting the NCAA Final Four Tournament in your city. During the last tournament that you hosted there were issues providing enough "hot grilled items" like hot dogs, chicken sandwiches or burgers at the arena. (To make it easier these will be referred to as "one unit sandwiches"). In order to improve the fan experience you want to address those issues. During a typical college game, the arena can handle the volume, but during large capacity events the "one unit sandwiches" are made in the dining halls in advance and transported to the arena in heating units to be sold. There are not enough grills in the arena to handle big events. To address these issues you are considering purchasing an additional grill for the main concession area. You expect to save $.35 in direct labor per sandwich by providing the grills. The burden on labor saved is 45%, cost for set-up for each game is $50, interest rate is 17%, your allowances for taxes and insurance is 10%, depreciation and obsolescence is 100% and the allowance for maintenance is 25%. The cost of the grill is $4500. If you want to pay for the grill over the course of the 4 games (tournament weekend), how many pieces must be made for the fixture to pay for itself? If the arena has the capacity for 18,000 people and 40% purchase a sandwich, Is the answer from part "a" a reasonable expectation? Explain why
