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(Solved by Expert Tutors) The manager of a local pub is considering adding a healthier option


to the menu in the form of a veggie plate with hummus. There are two options with the price to the customers the same. The make in-house option is to buy local produce from a local farmer?s market and have the staff assemble the veggie plates. This would require some special prep space, equipment, etc. and a part-time prep cook would need to be hired. The pub manager estimates the fixed costs of this option at $12,000 and variable costs at $1.50 per veggie plate. The buy (or outsource) option is to contract with a local supplier and get preassembled veggie plates for $2 per plate. This however, would require a new refrigerator to hold the preassembled plates at an annual fixed cost of $2400.

-1.?At how many veggie plates sold does it still make sense to install the equipment and make the plates in house? To get them from a supplier?
-2.?How many plates must be sold to make the manager indifferent across the make or buy options?

 


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DATE ANSWERED

Apr 19, 2020

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