Brief Description of the Company
The company interviewed was “Let Us Do the Cooking Catering and Café of Killeen, TX”. The questions asked were related to the topic of managerial economics with a sub-topic cost theory and estimation. The business is family owned and started out in the garage at the home. The original design was to deliver meals to people so they would not have to cook for themselves. The food was ordered each day before noon and was delivered for dinner time. The business expanded to add catering and that brought the distinction of being one of the best caterers in Central Texas for 2013 (kdhnews, 2014). The business moved into a larger space in 2010. The catering part of the business has become the largest supplier of banquet services to the Killeen and the surrounding cities of Central Texas and is the major source for catering of military banquets from Fort Hood (Lucas, Catering manager, personal communication, 2014). Let Us Do the Cooking is a young company with great potential. Looking at cost theory and estimation in relationship to managerial economics should prove to be productive for the management.
Questions Asked of the Company
Question 1: Determine what costs are fixed and variable?
In order to determine the total cost of running a company, a manager must add the total fixed cost and the total variable cost together (Salvatore, 2012, p.319). In the case of Let Us Do the Cooking, the manager must first separate the two parts of the business into the café and the catering portions. The company actually has a manager for each parts of the business but has one operations officer that handles pay-role, rent, equipment, banking, and all other functions of a general manger over operations. Fixed costs are the costs related to, “the obligations of the firm per time period for all fixed inputs…which include interest payments on borrowed capital, rental expenditures on leased plant and equipment for depreciation associated...