The owner of Genuine Subs, Inc., hopes to expand the present operation by adding

ID: 2746495 • Letter: T

Question

The owner of Genuine Subs, Inc., hopes to expand the present operation by adding one new outlet. She has studied three locations. Each would have the same labor and materials costs (food, serving containers, napkins, etc.) of $1.80 per sandwich. Sandwiches sell for $2.66 each in all locations. Rent and equipment costs would be $5,030 per month for location A, $5,580 per month for location B, and $5,760 per month for location C.

Determine the volume necessary at each location to realize a monthly profit of $10,500. (Do not round intermediate calculations. Round your answer to the nearest whole number.)

If expected sales at A, B, and C are 20,800 per month, 22,700 per month, and 23,300 per month, respectively, calculate the profit of the each locations? (Omit the "$" sign in your response.)

Explanation / Answer

1.Profit on every sandwitch = (2.66-1.80)=0.86

Target profit in Location A=B=C=10,500

Fixed Cost in Location A= 5,030.B=5,580 & C=5.760

Sales qty = (Profit + Fixed cost)/profit per unit

So sales qty at A= (10,500+5,030)/0.86 = 18,058

Sales qty at B= (10,500++5,580)/0.86=18,698

Sales qty at C= (10,500++5,760)/0.86=18,907

2. Expected Sales at A=20,800, B=22,700 & C=23,000

Profit= (Sales qty*Profit per unit) - Fixed Cost

Proft at A= (20,800*0.86) - 5,030 =12,858

Profit at B= (22,700*0.86) - 5,580 =13,942

Profit at C = (23,000*0.86) - 5,760 = 14,020

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The owner of Genuine Subs, Inc., hopes to expand the present operation by adding

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