In the bartender scenario, what is the employer's cost of the free daily meal?

In the bartender scenario, what is the employer's cost of the free daily meal?

• A. $15
• B. $125
• C. $250
• D. $0

Answer: (A)

The main idea is that when an employer provides meals to employees on the job, the employer bears the cost of those meals, and that cost is treated as the value of the fringe benefit. In this bartender scenario, a typical on-duty employee meal is valued at about $15. So the employer’s cost for the free daily meal is $15 per day. The other options imply higher meal prices or no cost, which don’t fit because the employer does incur a real cost for furnishing the meal.

The main idea is that when an employer provides meals to employees on the job, the employer bears the cost of those meals, and that cost is treated as the value of the fringe benefit. In this bartender scenario, a typical on-duty employee meal is valued at about $15. So the employer’s cost for the free daily meal is $15 per day. The other options imply higher meal prices or no cost, which don’t fit because the employer does incur a real cost for furnishing the meal.