Authentic Serai Halia is a catering firm that serves variety of authentic traditional Malaysian cuisine. Wasimuddin AW and Saprang J, the restaurant owners want to expand their successful operations to cater foods for some major events in a neighboring town. After investigating their market segment, they have narrowed their choices to two proposals. First proposal is to project a capacity of 10 events per month. This would result in a cost of RM2,500 a month plus a cost of RM250 per event. Another proposal would have a capacity of 20 events per month, a cost of RM3,200 per month, and a cost of RM190 per event. The firm would charge RM480 for each event. Determine: (a) The break-even volume for each proposal. (b) The profit (or loss) would each proposal produce if monthly demand is 12 events. (c) If monthly demand is 25 events, which proposal would yield the greater profit?
Authentic Serai Halia is a catering firm that serves variety of authentic traditional Malaysian cuisine. Wasimuddin AW and Saprang J, the restaurant owners want to expand their successful operations to cater
foods for some major events in a neighboring town. After investigating their market segment, they have narrowed their choices to two proposals. First proposal is to project a capacity of 10 events per month.
This would result in a cost of RM2,500 a month plus a cost of RM250 per event. Another proposal would have a capacity of 20 events per month, a cost of RM3,200 per month, and a cost of RM190 per event. The firm would charge RM480 for each event. Determine:
(a) The break-even volume for each proposal.
(b) The profit (or loss) would each proposal produce if monthly demand is 12 events.
(c) If monthly demand is 25 events, which proposal would yield the greater profit?
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