You are the owner of a fast-food restaurant. Given a new item that you recently advertised

| November 24, 2016

Hello , first paragraph is my post , second is a comment from a class mate please i need to have an answer for her.

1-You are the owner of a fast-food restaurant. Given a new item that you recently advertised, you experience additional demand for your business that you do not want to ignore. Identify your fixed and variable costs at your fast-food restaurant, and explain the changes to each of these costs given the increased demand.

Increased demand can be met by a rise in no of serving staff, putting in extra chairs and extending the working hours.

Fixed costs are cost of electricity, phone and rent. With additional demand and ways suggested to cater to it none of these would change. If new chairs are bought then they are new fixed cost, which will rise due to higher demand

The variable costs in terms of wages will rise. Extra hours may need overtime wages to be paid, which again is a variable cost.

2-Ahmed,

You stated in your post that chairs are fixed cost. I disagree with you. If chairs are brought in for a period of time; this expense becomes a variable cost because it is a cost that may or may not be ongoing. For example, if the new product stops selling; than the extra business and chairs will be gone and so will this expense.

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