LOCAL 635 Case-chapter 2

LOCAL 635 Case-chapter 2 - makes my meal or not. The claim...

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LOCAL 635 Case Local 635 represents kitchen workers at hotels in several Midwestern cities. Part of their labor agreement states that workers “shall receive one free meal per shift up to a cost of $8, with any cost over $8 being deducted from wages paid to said employees.” A labor dispute arose at the Riverside Hotel shortly after it was opened in June. Kitchen workers who ate dinner at the late shift found that their wages were reduced by $7 for each meal they consumed at the hotel during their dinner break. Josh Parker, a line cook, stated the widely held belief of the workers, “There’s no way these dinners cost the riverside Hotel $15. This is just another case of management trying to rip us off. Take last night. I had a prime rib dinner. The piece of meat cost about $5 and the salad less than $1. That’s only $6. The cook will be paid for working in the kitchen for 8 hours whether he
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Unformatted text preview: makes my meal or not. The claim my meal costs $15 is baloney! Management sees the situation differently. In the case of Joshs dinner, it is agreed that the ingredients cost around $6. But there are labor costs to prepare the meal, and the cost of the oven is $18,000. Also utility costs should be taken into account, not to mention the cost of the bus boys salary to clean up after these meals. We sell the prime rib meal for $25 to our customers, so $15 is a bargain for our employees. Required: List examples of the costs to prepare meals at the Riverside Hotel that are fixed, variable and sunk. Provide an example of an opportunity cost the Riverside Hotel might have. What is a possible solution to this conflict?...
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