The owner of Genuine Subs, Inc hopes to expand the present operation by adding o
ID: 469335 • 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, ect) of 1.76 per sandwich. Sanwiches sell for 2.65 each in all locations. Rent and equipment costs would be 5,000 per month for location A. 5,500 per month for location B, and 5,800 for location C.
A.Determine the volume necessary at each location to realize a monthly profit of 10,000
B. If expected sales at A, B, and C are 21,000 per month, and 23000 per month repectively, which location would yield the greatest profits??
** Please show me the formulas so i can use them again! We use excel!
Explanation / Answer
We proceed to show the calculations in Excel. Column B gives the formulas for easy use.
As only 2 values are mentioned in part B, we assume that the expected sales of A, B and C are 21,000, 22,000 and 23,000 respectively.
A. Monthly Profit = 10,000
Thus, Volume * (Selling Price - Cost) - Rent & Equipment Costs = 10,000
Volume = (10,000 + Rent & Equipment Cost) / (Selling Price - Cost)
B. Profit = Expected Sales * (Selling Price - Cost) - Rent & Equipment Costs
Thus location C would yield the greatest profit.
Variable Formula A B C Cost C Given 1.76 1.76 1.76 Selling Price SP Given 2.65 2.65 2.65 Rent & Equipment Costs RE Given 5000 5500 5800 Monthly Profit MP Given in Part A 10000 10000 10000 Volume V (1000 + RE) / (SP -C) 16853.93 17415.73 17752.81 Expected Sales ES Given in Part B 21000 22000 23000 Profit P ES * (SP-C) - RE 13690 14080 14670Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.