A new restaurant has recently opened in your community and it is a huge success with an average of 520-540 customers daily. The owner has had to hire additional workers at $20 per hour to help with the dishwashing as each customer uses on average 5 dishes. The owner has investigated purchasing a large dishwashing machine which costs $260,000, but is uncertain as to whether it is worth it as this would be a huge expenditure for a new business owner and the purchase feels a bit daunting. The machine has an expected useful life of 10 years. The owner has hired you to determine whether the investment would be wise. Restaurant Facts 1. There are 3 restaurant shifts (breakfast, lunch, dinner) where each shift lasts 3 hours 2. On average, 900 dishes need washing per shift 3. The restaurant is open 360 days per year Market conditions: 1. Wages are expected to increase 1% each year 2. Interest rates are 8% 3. Interest is compounded quarterly Manual labor for dishwashing 1. For each of the 3 shifts, dishwashers need to setup and get ready for the rush. Setup takes 1 hour per shift. 2. A dishwasher can wash 5 dishes per minute. Machine labor requirements 1. The machine needs to be prepared to run for the day and it takes 1 hour. The owner needs to hire a maintenance worker who can maintain the machine. This worker would cost the owner $40 per day. 2. The labor requirements to load and empty the machine are 2 hours per shift.
A new restaurant has recently opened in your community and it is a huge success with an average of 520-540 customers daily. The owner has had to hire additional workers at $20 per hour to help with the dishwashing as each customer uses on average 5 dishes. The owner has investigated purchasing a large dishwashing machine which costs $260,000, but is uncertain as to whether it is worth it as this would be a huge expenditure for a new business owner and the purchase feels a bit daunting. The machine has an expected useful life of 10 years. The owner has hired you to determine whether the investment would be wise. Restaurant Facts 1. There are 3 restaurant shifts (breakfast, lunch, dinner) where each shift lasts 3 hours 2. On average, 900 dishes need washing per shift 3. The restaurant is open 360 days per year Market conditions: 1. Wages are expected to increase 1% each year 2. Interest rates are 8% 3. Interest is compounded quarterly Manual labor for dishwashing 1. For each of the 3 shifts, dishwashers need to setup and get ready for the rush. Setup takes 1 hour per shift. 2. A dishwasher can wash 5 dishes per minute. Machine labor requirements 1. The machine needs to be prepared to run for the day and it takes 1 hour. The owner needs to hire a maintenance worker who can maintain the machine. This worker would cost the owner $40 per day. 2. The labor requirements to load and empty the machine are 2 hours per shift.
Chapter10: Short-term Decision Making
Section: Chapter Questions
Problem 1EA: Garrison Boutique, a small novelty store, just spent $4,000 on a new software program that will help...
Related questions
Question
Transcribed Image Text:A new restaurant has recently opened in your community and it is a huge success with an
average of 520-540 customers daily. The owner has had to hire additional workers at $20 per
hour to help with the dishwashing as each customer uses on average 5 dishes. The owner has
investigated purchasing a large dishwashing machine which costs $260,000, but is uncertain as
to whether it is worth it as this would be a huge expenditure for a new business owner and the
purchase feels a bit daunting. The machine has an expected useful life of 10 years. The owner
has hired you to determine whether the investment would be wise.
Restaurant Facts
1. There are 3 restaurant shifts (breakfast, lunch, dinner) where each shift lasts 3 hours
2. On average, 900 dishes need washing per shift
3. The restaurant is open 360 days per year
Market conditions:
1. Wages are expected to increase 1% each year
2. Interest rates are 8%
3. Interest is compounded quarterly
Manual labor for dishwashing
1. For each of the 3 shifts, dishwashers need to setup and get ready for the rush. Setup takes
1 hour per shift.
2. A dishwasher can wash 5 dishes per minute.
Machine labor requirements
1. The machine needs to be prepared to run for the day and it takes 1 hour. The owner
needs to hire a maintenance worker who can maintain the machine. This worker would
cost the owner $40 per day.
2. The labor requirements to load and empty the machine are 2 hours per shift.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT