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21 June, 21:29

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 $1.20 per sandwich. Sandwiches sell for $2.00 each in all locations. Rent and equipment costs would be $5,050 per month for location A, $5,525 per month for location B, and $5,775 per month for location C. a. Determine the volume necessary at each location to realize a monthly profit of $8,250. (Do not round intermediate calculations. Round your answer to the nearest whole number.) Location Monthly Volume A B C b-1. If expected sales at A, B, and C are 19,250 per month, 21,250 per month, and 22,250 per month, respectively, calculate the profit of the each locations

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  1. 21 June, 21:49
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    (a) Volume at location A = 16,625

    Volume at location B = 17,219

    Volume at location C = 17,531

    (b) Profit of location A = $2,650

    Profit of location B = $2,975

    Profit of location C = $3,125

    Explanation:

    (a) Let the volume at each location be represented by v

    Location A

    Profit = revenue - total expenditure

    8,250 = 2v - (1.2v + 5,050)

    8,250 = 2v - 1.2v - 5,050

    0.8v = 8,250 + 5,050 = 13,300

    v = 13,300/0.8 = 16,625

    Location B

    Profit = revenue - total expenditure

    8,250 = 2v - (1.2v + 5,525)

    8,250 = 2v - 1.2v - 5,525

    0.8v = 8,250 + 5,525 = 13,775

    v = 13,775/0.8 = 17,219 (to the nearest whole number)

    Location C

    Profit = revenue - total expenditure

    8,250 = 2v - (1.2v + 5,775)

    8,250 = 2v - 1.2v - 5,775

    0.8v = 8,250 + 5,775 = 14,025

    v = 14,025/0.8 = 17,531 (to the nearest whole number)

    (b) Location A

    Profit = sales - total expenditure = 19,250 - (1.2*9,625 + 5,050) = 19,250 - 16,600 = $2,650

    Location B

    Profit = sales - total expenditure = 21,250 - (1.2*10,625 + 5,525) = 21,250 - 18,275 = $2,975

    Location C

    Profit = sales - total revenue = 22,250 - (1.2*11,125 + 5,775) = 22,250 - 19,125 = $3,125
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