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 $2.40 per sandwich. Sandwiches sell for $3.20 each in all locations
Target Volume for each location
A 21,125 units
B 21,344 units
C 21,656 units
Operating Income for each location:
A $ 14,550
B $ 11,975
C $ 13,325
Explanation:
MISSING INFORMATION:
Rent and equipment costs would be $5,650 per month for location A, $5,825 per month for location B, and $6,075 per month for location C. a. Determine the volume necessary at each location to realize a monthly profit of $11,250. (Do not round intermediate calculations. Round your answer to the nearest whole number.) Location Monthly Volume A B C b-1. If expected sales at A, B, and C are 25,250 per month, 22,250 per month, and 24,250 per month, respectively, calculate the profit of the each locations? (Omit the "$" sign in your response.) Location Monthly Profits A $ B $ C $ b-2. Which location would yield the greatest profits?
(profit + fixed) / contribution ratio = target sales
Contribution Margin per unit 3.20 - 2.40 = 0.80
A (11,250 + 5,650) / 0.80 = 21,125 units
B (11,250 + 5,825) / 0.80 = 21,344 units
C (11,250 + 6,075) / 0.80 = 21,656 units
Operating Income for each location:
A 25,250 x $0.8 - $5,650 = $ 14,550
B 22,250 x $0.8 - $5,825 = $ 11,975
C 24,250 x $0.8 - $6,075 = $ 13,325
shop A would yield the greatest profit $14,550
Explanation: Complete question
of $2.40 per sandwich. Sandwiches sell for $3.20 each in all locations. Rent and equipment costs would be $5,650 per month for location A, $5,825 per month for location B, and $6,075 per month for location C. a. Determine the volume necessary at each location to realize a monthly profit of $11,250. Round your answer Location Monthly Volume A B C b-1. If expected sales at A, B, and C are 25,250 per month, 22,250 per month, and 24,250 per month, respectively, calculate the profit of the each locations?
Solution
Volume needed to realize profit of $11,250
A. ( $5650 + $11,250) / ( $3.20 - 2.40)
= $16900 / 0.8
= 21,125
B. ( $5825 + $11,250) / ( $3.20 - 2.40)
= $17075/0.8
= $21,343.75
C. ( $6075 + $11,250) / ( $3.20 - 2.40)
= $17325 / 0.8
= $21,656.25
Profit of each location
A. $25250 * ( 3.20 - 2.40 ) - 5650
= $14,550
B. $22250 * ( 3.20 - 2.40 ) - 5825
= $11,975
C. $24250 * ( 3.20 - 2.40 ) - 6075
= $13,325
answer; whoever is willing and able to pay the price;