The Company’s research department has provided the following estimates: A demand of 230 banquet attendees can be expected at a dinner plate price of $80 each. A demand of 370 banquet attendees can be expected at a dinner plate price of $45 each. Catering Service A has a fixed cost of $1,900 and a marginal cost of $30 for each plate. Catering Service B has a fixed cost of $3,000 and a marginal cost of $22 for each plate. Costs for both caterers include the food, drinks, plates, utensils, tablecloths, glasses, crew, and cleanup. Dinner plates will only be sold as an entire unit. To justify company resources and to ensure the event will benefit the charity, the CEO insists the tickets be sold for no less than $40. All profits will go toward a charity of the committee's choosing. Additional spontaneous donation to the charity will be accepted the night of the banquet. Studies estimate that 5% will give $5, 23% will give $20, 18% will give $50, 7% will give $100, and 2% will give $500. Overall recommendations: Which catering service does your committee recommend in order to obtain the most profit for the charity? How many people should attend the banquet to earn that profit and what profit can be expected from the banquet ticket sales? What price would you recommend for each dinner plate (ticket)? What dollar amount is expected from spontaneous donations? What will be the expected total amount raised for the charity (including the dinner ticket profits and spontaneous donations)?
The Company’s research department has provided the following estimates:
A demand of 230 banquet attendees can be expected at a dinner plate price of $80 each.
A demand of 370 banquet attendees can be expected at a dinner plate price of $45 each.
Catering Service A has a fixed cost of $1,900 and a marginal cost of $30 for each plate.
Catering Service B has a fixed cost of $3,000 and a marginal cost of $22 for each plate.
Costs for both caterers include the food, drinks, plates, utensils, tablecloths, glasses, crew, and cleanup.
Dinner plates will only be sold as an entire unit. To justify company resources and to ensure the event will benefit the charity, the CEO insists the tickets be sold for no less than $40. All profits will go toward a charity of the committee's choosing.
Additional spontaneous donation to the charity will be accepted the night of the banquet. Studies estimate that 5% will give $5, 23% will give $20, 18% will give $50, 7% will give $100, and 2% will give $500.
Overall recommendations: Which catering service does your committee recommend in order to obtain the most profit for the charity? How many people should attend the banquet to earn that profit and what profit can be expected from the banquet ticket sales? What price would you recommend for each dinner plate (ticket)? What dollar amount is expected from spontaneous donations? What will be the expected total amount raised for the charity (including the dinner ticket profits and spontaneous donations)?
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