Question

The Bella Capri runs as an Italian restaurant that specializes in freshly prepared cooked meals. It is located in premises on a main street of town with seating capacity for 45 customers. The lease on the premises is $250 per week. General business expesnes are a further $150 each week. Light, heat and fuel are $40 per week. Wage costs for three staff (cook and two waiters) is $600 per week including all other employment costs. The restaurant has set their prices so that it is possible to buy a meal for around $16 per head on average. The cost of the ingredients would be no more than $4 per head. What will be the fixed costs for Bella Capri per week

Answer 1

The answer is $1000.

Step-by-step explanation:

We can define fixed cost as the costs that does not increase or decrease as with the change in the service given or the goods produce.

According to this, we can say that the $16 price per meal and therefore the $4 ingredients are not included in the fixed cost. The light, heat and fuel are also dependent on the usage, so they do vary with the service given.

The other costs given in the question are eligible to be counted as fixed costs because they are not dependent on the number of costumers or the amount of food served.

So the fixed costs for Bella Capri per week is $250 + $150 + $600 = $1000.

I hope this answer helps.