Akiko, a mobile Vegan caf, in London sells wraps, bowls, and burgers. It employs two sandwich artists

Akiko, a mobile Vegan café, in London sells wraps, bowls, and burgers. It employs two sandwich artists to assemble the wraps as per customer requests. The café’s current daily labor cost is £160, the equipment cost is £175, and the overhead cost is £125. Daily demands, along with selling price and material costs per beverage, are given here:

Jimmy Riverside, the manager at Akiko, would like to understand how adding waffles and ice-cream will alter the café’s productivity. His market research shows that waffles and ice-cream will attract both American and European tourists. Assuming that the new equipment is purchased before these are added to the menu, Jimmy has developed new average daily demand and cost projections. The new equipment cost is £350, and the overhead cost is £100. Modified daily demands, as well as selling price and material costs per units for the new product lines, are given here:

a. Calculate the change in labor and multifactor productivity if waffles and ice-cream are added to the
menu.
b. If everything else remains unchanged, how many units of waffles and ice-cream would have to be sold to ensure that the multifactor productivity remains at its current level?

Transcribed Image Text:

Number of units sold Price per item Materials (£) Wraps 250 £4 £0.90 Bowls 300 £5.50 £1.40 Burgers 100 £6.00 £1.75