A cafe specializes in short order meals; and, morning and afternoon snack breaks.It is open from 9:00 am until 4:00 pm.An office manager in a nearby high rise office building offers the owner a contract to provide her 50 employees with afternoon snack breaks for $2.00 each.Each employee would receive a drink and a snack item.The shop has an hourly capacity of 50 customers.The owner estimates that the variable costs of the afternoon breaks would be $1.20 each.Currently the afternoon service, starting at 2:00, is running at only 50 percent capacity, although the morning and noon activities are near capacity.At the present level of operations each meal/snack served is allocated a fixed cost of $0.25.Required:
a.What nonfinancial factors should be considered by the owner?
b.Given your concerns listed in part a.and quantitative analysis, should the offer be accepted? Why or why not?

Question

Quizplus · Accepted Answer

The Answer of A cafe specializes in short order meals; and, morning and afternoon snack breaks.It is open from 9:00 am until 4:00 pm.An office manager in a nearby high rise office building offers the owner a contract to provide her 50 employees with afternoon snack breaks for $2.00 each.Each employee would receive a drink and a snack item.The shop has an hourly capacity of 50 customers.The owner estimates that the variable costs of the afternoon breaks would be $1.20 each.Currently the afternoon service, starting at 2:00, is running at only 50 percent capacity, although the morning and noon activities are near capacity.At the present level of operations each meal/snack served is allocated a fixed cost of $0.25.Required:
a.What nonfinancial factors should be considered by the owner?
b.Given your concerns listed in part a.and quantitative analysis, should the offer be accepted? Why or why not?

A Cafe Specializes in Short Order Meals; And, Morning and Afternoon