Managerial Accounting: Nature's Garden, a new restaurant situated on a busy highway
Nature's Garden, a new restaurant situated on a busy highway in Pomona, California, specializes in a chef's salad selling for $7.00. Daily fixed costs are $1,200, and variable costs are $4.00 per meal. With a capacity of 800 meals per day, the restaurant serves an average of 750 meals each day.
a) Determine the current average costs per meal. b) A busload of 30 Girl Scouts stops on its way home from the San Bernardino National Forest. The leaders offers to bring them in if the scouts can all be served a meal for a total of $150. The owner refuses, saying he would lost $0.60 per meal if he accepted this offer. How do you think the owner arrived at the $0.60 figure? Comment on owner's reasoning. c) A local businessman on break overhears the conversation with the leader and offers the owner a one-year contract to feed 300 of the businessman's employees one meal each day at a special price of $4.50 per meal. Should the restaurant owner accept this offer? Why or why not?