Cost allocation and abc - analyzing cost behaviors


Please respond to at least two of the following questions. Do this as a "response."

Have you ever walked into a restaurant during lunch in downtown and found it almost empty? Or Flown on a flight with so many empty seats you could sleep horizontally on the two seats next to you without anyone waking you up? Or visited a miniature golf course in the summer resort community during some time of the season and you were the only one there?

1. Why does the restaurant even bother to stay open, because it might seem that the revenue from the few customers could not possibly cover the cost of running the restaurant? Why do you think the restaurant still open even though it's not covering all its costs?

2. In making the decision whether to open for lunch, what kind of costs must the restaurant consider in the decision making and why?

3. Why do you think "Priceline.com" and other discounted hotel and concert ticket vendors sell their ticket at such a lower price and sometimes below their cost?

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Operation Management: Cost allocation and abc - analyzing cost behaviors
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