Tommy Appleton is in charge of arranging the “social hour” period and dinner for the monthly meetings of the local chapter of the Management Accountants Association. Tommy is negotiating with a new restaurant that would like to have the group’s business, and Tommy wants to apply some of the cost– volume–profit analysis concepts he has learned. The restaurant is proposing its regular menu prices of $8 for a before-dinner hors d’oeuvre and $22 for dinner. Tommy has determined that, on average, the people attending the meeting have 1.5 hors d’oeuvres before dinner. He also believes that the contribution margin ratios for the hors d’oeuvres and dinner are 50% and 40%, respectively.

Required:

Prepare a memo to Tommy outlining the possible offers he might make to the restaurant owner, and recommend which offer he should make.

Answer rating: 100% (QA)

Memo To Tommy Appleton From Your Name Subject CostVolumeProfit Analysis for Management Accountants A... View the full answer