**Special Order Analysis**Denny's, located off the San Bernardino Freeway in Pomona, California, offers a Super Slam breakfast priced at $7. The restaurant incurs daily fixed costs of $1,575 and variable costs of $5 per meal. With a daily capacity of 750 meals, the average number of meals served is 700.**Required:**a. **Determine the current average cost per meal.**b. **Scenario 1:** - A group of 30 Girl Scouts stops by after visiting the San Bernardino National Forest. The leader proposes that all scouts be served for a total of $195. The restaurant owner declines, suggesting this would result in a loss of $0.75 per meal. Investigate the owner's calculation. Discuss the owner's reasoning. c. **Scenario 2:** - A local businessman overhears the discussion and proposes an annual contract to feed 100 employees at $5.50 per meal. Evaluate whether the owner should accept this offer and justify your reasoning.

Current average cost of meal would be determined by adding total variable cost and fixed cost and…

Bernardino Freeway in Pomona, California, specializes in a Super Slam breakfast selling for $7. Assume daily fixed costs are $1,575, and variable costs are $5 per meal. With a capacity of 750 meals per day, the restaurant serves an average of 700 meals each day. REQUIRED а. Determine the current average cost per meal. b. A busload of 30 Girl Scouts stops on its way home from the San Bernardino National Forest. The leader offers to bring them in if the scouts can all be served a meal for a total of $195. The owner refuses, saying he would lose $0.75 per meal if he accepted this offer. How do you think the owner arrived at the $0.75 figure? Comment on the owner's reasoning. A local businessman on a break overhears the conversation with the leader and offers the owner a one-year contract to feed 100 of the businessman's employees one meal each day at a special price of $5.50 per meal. Should the restaurant owner accept this offer? Why or why not? с.

Bernardino Freeway in Pomona, California, specializes in a Super Slam breakfast selling for $7. Assume daily fixed costs are $1,575, and variable costs are $5 per meal. With a capacity of 750 meals per day, the restaurant serves an average of 700 meals each day. REQUIRED а. Determine the current average cost per meal. b. A busload of 30 Girl Scouts stops on its way home from the San Bernardino National Forest. The leader offers to bring them in if the scouts can all be served a meal for a total of $195. The owner refuses, saying he would lose $0.75 per meal if he accepted this offer. How do you think the owner arrived at the $0.75 figure? Comment on the owner's reasoning. A local businessman on a break overhears the conversation with the leader and offers the owner a one-year contract to feed 100 of the businessman's employees one meal each day at a special price of $5.50 per meal. Should the restaurant owner accept this offer? Why or why not? с.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

**Special Order Analysis**

Denny's, located off the San Bernardino Freeway in Pomona, California, offers a Super Slam breakfast priced at $7. The restaurant incurs daily fixed costs of $1,575 and variable costs of $5 per meal. With a daily capacity of 750 meals, the average number of meals served is 700.

**Required:**

a. **Determine the current average cost per meal.**

b. **Scenario 1:**
- A group of 30 Girl Scouts stops by after visiting the San Bernardino National Forest. The leader proposes that all scouts be served for a total of $195. The restaurant owner declines, suggesting this would result in a loss of $0.75 per meal. Investigate the owner's calculation. Discuss the owner's reasoning.

c. **Scenario 2:**
- A local businessman overhears the discussion and proposes an annual contract to feed 100 employees at $5.50 per meal. Evaluate whether the owner should accept this offer and justify your reasoning.

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