Answered step by step
Verified Expert Solution
Question
1 Approved Answer
TU We two products should be produced? Briefly explain your answer. g. Special-Order Pricing Barry's Bar-B-Que is a popular lunch time spot. Barry is conscientious
TU We two products should be produced? Briefly explain your answer. g. Special-Order Pricing Barry's 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 600 patrons for his $5 lunch. His variable cost for each meal is about $2, and he figures his fixed costs, on a daily basis, are about $1,200. From time to time, bus-tour groups with 50 patrons stop by. He has welcomed them because he has capacity to seat 700 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 $3.50 per meal for each of the 50 bus-tour members. Required 1. What is the incremental profit (loss) per bus-tour meal? Should Barry accept the bus-tour offer? 2. What if the tour company were willing to guarantee 200 patrons (or four bus loads) at least once a month for $3.00 per meal? What is the incremental profit (loss) for each meal? Is the offer financially attractive
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started