Jonathan is considering opening a shop for online baseball memorabilia. He has two options. He can build the web site himself and only pay for hosting. This would cost him $2,000/year. The average item for sale is $4.01. Average costs associated with each sale are $2.99. His second option is to use an existing e-commerce service. This incurs an additional monthly cost of $15/month. The site takes a cut of his sales of $0.22/item, so he is planning on also increasing his prices by $0.46/item. The remaining costs stay the same. What is the variable cost for the self-developed site option? a. None of the other options. b. 0.46 O c. 2180 O d. 4.01 e. 2.99 O f. 3.21 O g. 4.47
Jonathan is considering opening a shop for online baseball memorabilia. He has two options. He can build the web site himself and only pay for hosting. This would cost him $2,000/year. The average item for sale is $4.01. Average costs associated with each sale are $2.99. His second option is to use an existing e-commerce service. This incurs an additional monthly cost of $15/month. The site takes a cut of his sales of $0.22/item, so he is planning on also increasing his prices by $0.46/item. The remaining costs stay the same. What is the variable cost for the self-developed site option? a. None of the other options. b. 0.46 O c. 2180 O d. 4.01 e. 2.99 O f. 3.21 O g. 4.47
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Jonathan is considering opening a shop for online baseball memorabilia. He has two options. He can
build the web site himself and only pay for hosting. This would cost him $2,000/year. The average item for
sale is $4.01. Average costs associated with each sale are $2.99.
His second option is to use an existing e-commerce service. This incurs an additional monthly cost of
$15/month. The site takes a cut of his sales of $0.22/item, so he is planning on also increasing his prices
by $0.46/item. The remaining costs stay the same.
What is the variable cost for the self-developed site option?
a. None of the other options.
b. 0.46
O c. 2180
d.
4.01
e. 2.99
f. 3.21
O g. 4.47
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