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Local 635


Submitted By dtillis
Words 436
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A. List examples of costs at the Riverside Hotel that are variable, fixed, and sunk. Provide an example of an opportunity costs.

Variable cost are cost that fluctuate based on the demands of doing business. In this case examples of variable cost can be identified as the meat, salad, the cook (labor)
Fixed cost are cost that remain constant regardless of business activity. Examples of fixed cost in this case would be labor, oven use, and utilities.
Sunk cost are simply cost incurred in the past. An example of that would be the cost of the oven, and overhead cost.
Opportunity cost are the value of benefits forgone. Example, if Riverside hotel sold the dinner to a non-employee patron they could have made an additional $10, but because they give that discount to employees they miss out on that revenue. B. What is the source of conflict between labor and management at the Riverside Hotel? What changes would you recommend in the wording of the labor agreement?

The main source of conflict between management and the kitchen workers comes from each parties understanding of direct and indirect cost associated with meals offered to employees.
The management has provided an agreement with workers stating that workers “shall receive one free meal per shift up to a cost of $12, with any cost over $12 being deducted from wages paid to said employee.”
A line cook (Josh Parker) analyzed the cost of a meal he had yet he only considered the cost of material used in making the meal. For example when calculating the cost of a prima rib, Josh takes into account the direct material cost of meat and salad which is only the incremental cost which would only account for changes in variable cost associated with producing an extra unit of the dish.
Management took a much different approach, calculating the cost associate with meals consumed by employees. Instead of just

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