Anchor's Inn is a fine dining restaurant. Recently, the restaurant's owner, Megan, was approached by a...

Transcribed Image Text:

Anchor's Inn is a fine dining restaurant. Recently, the restaurant's owner, Megan, was approached by a company, NewLink Inc., with a proposal for a special order. NewLink is organizing their annual employee recognition event and would like to hold the event at Anchor's Inc. NewLink Inc. would need Anchor Inn to provide service for 200 of NewLinks invitees. Considering this opportunity, Megan estimates that she could charge $90 per person for food, desert, and beverages, and estimates that it would cost the restaurant $40 per person for food and $20 per person for beverages. To accept the opportunity for NewLink, Megan would need to close the restaurant for other diners. Typically, Anchor's Inn would serve 220 people per evening. Each diner spends on average of $65 and, per person, it costs Anchor's Inn an estimated $24 for food and $15 for beverages. Since the number of people typically dining at Anchor's Inn is less than the number of diners proposed by NewLink, Megan would not need to hire additional staff to accept NewLink's proposal. Required (A) Based on financial considerations alone, should Megan accept NewLink's proposal? By how much would income increase or decrease if Megan accepted NewLink's proposal? (B) Before deciding whether to accept the New Link's proposal, what other factors should Megan consider? Anchor's Inn is a fine dining restaurant. Recently, the restaurant's owner, Megan, was approached by a company, NewLink Inc., with a proposal for a special order. NewLink is organizing their annual employee recognition event and would like to hold the event at Anchor's Inc. NewLink Inc. would need Anchor Inn to provide service for 200 of NewLinks invitees. Considering this opportunity, Megan estimates that she could charge $90 per person for food, desert, and beverages, and estimates that it would cost the restaurant $40 per person for food and $20 per person for beverages. To accept the opportunity for NewLink, Megan would need to close the restaurant for other diners. Typically, Anchor's Inn would serve 220 people per evening. Each diner spends on average of $65 and, per person, it costs Anchor's Inn an estimated $24 for food and $15 for beverages. Since the number of people typically dining at Anchor's Inn is less than the number of diners proposed by NewLink, Megan would not need to hire additional staff to accept NewLink's proposal. Required (A) Based on financial considerations alone, should Megan accept NewLink's proposal? By how much would income increase or decrease if Megan accepted NewLink's proposal? (B) Before deciding whether to accept the New Link's proposal, what other factors should Megan consider?

Answer rating: 100% (QA)

1 Increase in net income Evaluation of Special Order Incremental revenue Less In... View the full answer