The owner of Genuine Subs, Inc., hopes to expand the present operation by adding
ID: 464542 • 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 $1.60 per sandwich. Sandwiches sell for $2.67 each in all locations. Rent and equipment costs would be $5,000 per month for location A, $5,590 per month for location B, and $5,730 per month for location C.
Determine the volume necessary at each location to realize a monthly profit of $10,000. (Do not round intermediate calculations. Round your answer to the nearest whole number.)
If expected sales at A, B, and C are 20,600 per month, 22,300 per month, and 22,700 per month, respectively, calculate the profit of the each locations? (Omit the "$" sign in your response.)
Which location would yield the greatest profits?
a.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.)
Explanation / Answer
a.
Determine the volume necessary at each location to realize a monthly profit of $10,000:
location
Working notes
Monthly Volume
A
$10,000 + $5,000 /($2.67-$1.60)
14019
B
$10,000 + $5,590 /($2.67-$1.60)
14570
C
$10,000 + $5,730 /($2.67-$1.60)
14701
b -1:
Calculate the profit of the each location:
location
Working notes
Monthly profits
A
20,600 *($2.67-$1.60) - $5,000
17042
B
22,300 * ($2.67 -$1.60) -$5,590
18271
C
22,700 * ($2.67 -$1.60) -$5,730
18559
b-2:
location c has the greater profit
location
Working notes
Monthly Volume
A
$10,000 + $5,000 /($2.67-$1.60)
14019
B
$10,000 + $5,590 /($2.67-$1.60)
14570
C
$10,000 + $5,730 /($2.67-$1.60)
14701
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