3.3 The owner of Genuine Subs, Inc., hopes to expand the present operation by ad
ID: 407874 • Letter: 3
Question
3.3
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 $1.60 per sandwich. Sandwiches sell for $2.71 each in all locations. Rent and equipment costs would be $5,040 per month for location A, $5,570 per month for location B, and $5,720 per month for location C.
Determine the volume necessary at each location to realize a monthly profit of $11,000. (Do not round intermediate calculations. Round your answer to the nearest whole number.)
If expected sales at A, B, and C are 20,500 per month, 22,100 per month, and 23,000 per month, respectively, calculate the profit of the each locations? (Omit the "$" sign in your response.)
Which location would yield the greatest profits?
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 $1.60 per sandwich. Sandwiches sell for $2.71 each in all locations. Rent and equipment costs would be $5,040 per month for location A, $5,570 per month for location B, and $5,720 per month for location C.
Explanation / Answer
Given,
a) For location A: Say the monthly volume is x units.
profit=sale-cost
11,000=2.71x-(1.6x+5040), i.e. 1.11x= 16,040, i.e. x=14450 units.
similarly For Lcation B, 11,000=2.71y-(1.6y+5570), i.e. y = 14928 units
and for location C, 11,000=2.71z-(1.6z+5720), i.e. z = 15063 units
b)
c) to check wchich location will yeild greatest profits, assume the expected sale from each location i s10000 units.
Hence, the Location A gives the greatest profits.
Locations A B C Labour & Material Costs ($/unit) 1.6 1.6 1.6 Sale Price / unit 2.71 2.71 2.71 Rent & equipment cost/ month 5,040 5,570 5,720Related Questions
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