Lantz Family Restaurant operates in a suburb of a major city. Recently, the managers at Lantz have noticed anincrease in the use of delivery apps such as Grubhub and DoorDash by their customers. The average fee paid byLantz for this service currently is $6 per delivery. The managers are considering starting their own delivery servicethat they estimate would attract about 75 percent of the current deliveries. (Not all customers will switch, eventhough the service would be free, because of the convenience of the app, habit, and other factors.)Estimates by the financial consultant to Lantz are that the cost of the service, if provided by Lantz, would be $3.90per delivery and an incremental $1,297 per month fixed costs. In an average month, 800 orders Lantz receivesare to be delivered.Required:a. Prepare a schedule that shows the differential costs.b. Should Lantz Family Restaurant provide their own delivery service or continue to rely on other firms? Required A Required BPrepare a schedule that shows the differential costs. (Select option "higher" or "lowebase. Select "none" if there is no effect.)Cost to buyVariable costsIncremental Fixed costsTotal costsStatus Quo(Buy)$$6,097 XAlternative(Make)6,097 $2,3401,2973,637$Difference4,800 X lower2,3401,297higherhigher>>>

A differential cost analysis or incremental cost analysis is prepared for managerial decision-making…

Answered: Lantz Family Restaurant operates in a…

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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