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Exercise 7-6 Incremental Analysis and Opportunity Costs Finn's Seafood Restaurant has been approached by New England Investments, which wants to hold an employee recognition dinner next month. Lillian Sumner, a manager of the restaurant provided the following information concerning the event: Charge per person, for food, wine, and dessert Number of participants expected Estimated cost of unprepared food per person Estimated cost of beverages per person To be able to accommodate the group, Lillian will have to close the restaurant for dinner that night. On a typical night, the following costs and other data are expected to be incurred: Number of people expected to be served $72 x 175 $36+ $14 Revenue: $12,600 Costs: $50 Cost lost from participants: $50 x 175 = (8,750) Net Gain = $3,850 Average bill per person Cost of unprepared food per person Cost of beverages per person No additional staff will need to be hired to accommodate the group from New England Investments. For 190 people- Revenue Lost: Cost Saving: $ $156 x 190 $20+ $17 $37 x 190 $ $ (10,640) $37 7,030 $ Required Calculate the incremental profit or loss associated with accepting the New England Investments group. CASA 72.00 175 36.00 14.00 $ $ 190 56.00 20.00 17.00 Revenue Lost (10,640) - Cost Saving 7,030 = Net Loss (3,610) Net Gain: $3,850 - 3,610 = $240 Exercise 7-6 Incremental Analysis and Opportunity Costs Finn's Seafood Restaurant has been approached by New England Investments, which wants to hold an employee recognition dinner next month. Lillian Sumner, a manager of the restaurant provided the following information concerning the event: Charge per person, for food, wine, and dessert Number of participants expected Estimated cost of unprepared food per person Estimated cost of beverages per person To be able to accommodate the group, Lillian will have to close the restaurant for dinner that night. On a typical night, the following costs and other data are expected to be incurred: Number of people expected to be served Revenue: $12,600 Costs: $50 Cost lost from participants: $50 x 175 = (8,750) Net Gain = $3,850 $72 x 175 $36+ $14 Average bill per person Cost of unprepared food per person Cost of beverages per person No additional staff will need to be hired to accommodate the group from New England Investments. For 190 people- Revenue Lost: Cost Saving: $ $156 x 190 $20+ $17 $37 x 190 $ $ (10,640) $37 7,030 $ Required Calculate the incremental profit or loss associated with accepting the New England Investments group. CASA 72.00 175 36.00 14.00 $ $ 190 56.00 20.00 17.00 Revenue Lost (10,640) - Cost Saving 7,030 = Net Loss (3,610) Net Gain: $3,850 - 3,610 = $240 Exercise 7-6 Incremental Analysis and Opportunity Costs Finn's Seafood Restaurant has been approached by New England Investments, which wants to hold an employee recognition dinner next month. Lillian Sumner, a manager of the restaurant provided the following information concerning the event: Charge per person, for food, wine, and dessert Number of participants expected Estimated cost of unprepared food per person Estimated cost of beverages per person To be able to accommodate the group, Lillian will have to close the restaurant for dinner that night. On a typical night, the following costs and other data are expected to be incurred: Number of people expected to be served $72 x 175 $36+ $14 Revenue: $12,600 Costs: $50 Cost lost from participants: $50 x 175 = (8,750) Net Gain = $3,850 Average bill per person Cost of unprepared food per person Cost of beverages per person No additional staff will need to be hired to accommodate the group from New England Investments. For 190 people- Revenue Lost: Cost Saving: $ $156 x 190 $20+ $17 $37 x 190 $ $ (10,640) $37 7,030 $ Required Calculate the incremental profit or loss associated with accepting the New England Investments group. CASA 72.00 175 36.00 14.00 $ $ 190 56.00 20.00 17.00 Revenue Lost (10,640) - Cost Saving 7,030 = Net Loss (3,610) Net Gain: $3,850 - 3,610 = $240 Exercise 7-6 Incremental Analysis and Opportunity Costs Finn's Seafood Restaurant has been approached by New England Investments, which wants to hold an employee recognition dinner next month. Lillian Sumner, a manager of the restaurant provided the following information concerning the event: Charge per person, for food, wine, and dessert Number of participants expected Estimated cost of unprepared food per person Estimated cost of beverages per person To be able to accommodate the group, Lillian will have to close the restaurant for dinner that night. On a typical night, the following costs and other data are expected to be incurred: Number of people expected to be served $72 x 175 $36+ $14 Revenue: $12,600 Costs: $50 Cost lost from participants: $50 x 175 = (8,750) Net Gain = $3,850 Average bill per person Cost of unprepared food per person Cost of beverages per person No additional staff will need to be hired to accommodate the group from New England Investments. For 190 people- Revenue Lost: Cost Saving: $ $156 x 190 $20+ $17 $37 x 190 $ $ (10,640) $37 7,030 $ Required Calculate the incremental profit or loss associated with accepting the New England Investments group. CASA 72.00 175 36.00 14.00 $ $ 190 56.00 20.00 17.00 Revenue Lost (10,640) - Cost Saving 7,030 = Net Loss (3,610) Net Gain: $3,850 - 3,610 = $240 Exercise 7-6 Incremental Analysis and Opportunity Costs Finn's Seafood Restaurant has been approached by New England Investments, which wants to hold an employee recognition dinner next month. Lillian Sumner, a manager of the restaurant provided the following information concerning the event: Charge per person, for food, wine, and dessert Number of participants expected Estimated cost of unprepared food per person Estimated cost of beverages per person To be able to accommodate the group, Lillian will have to close the restaurant for dinner that night. On a typical night, the following costs and other data are expected to be incurred: Number of people expected to be served Revenue: $12,600 Costs: $50 Cost lost from participants: $50 x 175 = (8,750) Net Gain = $3,850 $72 x 175 $36+ $14 Average bill per person Cost of unprepared food per person Cost of beverages per person No additional staff will need to be hired to accommodate the group from New England Investments. For 190 people- Revenue Lost: Cost Saving: $ $156 x 190 $20+ $17 $37 x 190 $ $ (10,640) $37 7,030 $ Required Calculate the incremental profit or loss associated with accepting the New England Investments group. CASA 72.00 175 36.00 14.00 $ $ 190 56.00 20.00 17.00 Revenue Lost (10,640) - Cost Saving 7,030 = Net Loss (3,610) Net Gain: $3,850 - 3,610 = $240 Exercise 7-6 Incremental Analysis and Opportunity Costs Finn's Seafood Restaurant has been approached by New England Investments, which wants to hold an employee recognition dinner next month. Lillian Sumner, a manager of the restaurant provided the following information concerning the event: Charge per person, for food, wine, and dessert Number of participants expected Estimated cost of unprepared food per person Estimated cost of beverages per person To be able to accommodate the group, Lillian will have to close the restaurant for dinner that night. On a typical night, the following costs and other data are expected to be incurred: Number of people expected to be served $72 x 175 $36+ $14 Revenue: $12,600 Costs: $50 Cost lost from participants: $50 x 175 = (8,750) Net Gain = $3,850 Average bill per person Cost of unprepared food per person Cost of beverages per person No additional staff will need to be hired to accommodate the group from New England Investments. For 190 people- Revenue Lost: Cost Saving: $ $156 x 190 $20+ $17 $37 x 190 $ $ (10,640) $37 7,030 $ Required Calculate the incremental profit or loss associated with accepting the New England Investments group. CASA 72.00 175 36.00 14.00 $ $ 190 56.00 20.00 17.00 Revenue Lost (10,640) - Cost Saving 7,030 = Net Loss (3,610) Net Gain: $3,850 - 3,610 = $240

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