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 $2.54 each in all locations. Rent and equipment costs would be $5,080 per month for location A, $5,510 per month for location B, and $5,750 per month for location C.

Determine the 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.)

If expected sales at A, B, and C are 21,000 per month, 22,100 per month, and 22,700 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 $2.54 each in all locations. Rent and equipment costs would be $5,080 per month for location A, $5,510 per month for location B, and $5,750 per month for location C.

Explanation / Answer

a)

To obtain $10,000 profits, they need to produce the following units for each location, as shown below:

LocationA = 14,900 units

LocationB = 15,405 units

LocationC = 15,574 units

Now, find out the expected profit of sales for each location.

Cost for each location = $2.54 - $1.60= 0.94

A 21,000 * 0.94 = $19,740

B 22,100* 0.94 = $20,774

C 22,700 * 0.94 = $21,338

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.