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

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 $1.60 per sandwich. Sandwiches sell for $2.75 each in all locations. Rent and equipment costs would be $5,040 per month for location A, $5,580 per month for location B, and $5,760 per month for location C. a. Determinethe volume necessary at each location to realize a monthly profit of $10,000, (Do not round intermediate calculations. Round your answer to the nearest whole number.) tion Monthly Volume b-1. If expected sales at A, B, and C are 20,700 per month, 22,500 per month, and 22,900 per month, respectively, calculate the profit of the each locations? (Omit the "$" sign in your response.) b-2. Which location would yield the greatest profits? O Location A Location B Location C

Explanation / Answer

Answer 1:

Cost of production selling price for location A = 1.6 2.75 5040, B= 1.6 2.75 5580, B= 1.6 2.75 5760

For A Suppose no. of sandwich required is “x”

So total profit equation is = 2.75x-1.6x-5040 = 10500

Therefore, 1.15x = 15540

Therefore, x= 13513

For B Suppose no. of sandwich required is “x”

So total profit equation is = 2.75x-1.6x-5580 = 10500

Therefore, 1.15x = 16080

Therefore, x= 13983

For C Suppose no. of sandwich required is “x”

So total profit equation is = 2.75x-1.6x-5760= 10500

Therefore, 1.15x = 16260

Therefore, x= 14139

Answer 2:

Expected Sale at location A = 20700

Profit = 1.15*20700-5040 =18765

Expected Sale at location B = 22500

Profit = 1.15*22500-5580 =20295

Expected Sale at location C = 22900

Profit = 1.15*22900-5760 =20575

Answer 3:

Location C would yield highest profit

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