Question:John Wilson, the owner of a fast-food restaurant, estimated that he can sell 1,000 additionalhamburgers per day by renting more automated equipment at a cost of $100 per day.Alternatively, he estimated that he could sell an extra 1,200 hamburgers per day keeping therestaurant open for two more hours per day at a cost of $50 per hour. Which of these twoalternative ways of increasing output should Mr. Wilson use?

Let's break down the analysis in more detail. 1. Cost Analysis: - Renting More Automated Equipment:…

Answered: Question: John Wilson, the owner of a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A local pizza shop owner decides to hire an economic consultant to help him set his prices. Currently, one slice of pizza costs $2 and the store sells about 800 slices per week. The pizza shop's current revenue from sales is equal to $____. The economic consultant estimates that the price elasticity of demand is equal to -0.25, and suggests that the shop owner should increase the price of a slice of pizza by $0.50; that is, the consultant recommends increasing the price of pizza by ____%. The consultant claims that doing so would (a. Increase b. Decrease or C.have no effect on)_____ the number of slices sold by ____% or ____ slices. As a result, the economist predicts that the new revenue would be ____ Thus as a result of the increase in the price there is ____ in revenue. This is due to the fact that the pizza shop owner was operating on the ____ portion of the demand curve. (fill in the blanks)
You are opening a coffee shop. You estimate the weekly costs of $375 for rent, $2100 for employee costs, and $125 for miscellaneous costs. The ingredients and material cost for each cup of coffee is 0.35 (cents) per cup. 1) Create a cost function for the coffee shop. 2) If the investors estimate that they will be able to sell 1100 cups of coffee per week. How much should they charge per cup to make a profit? Justify your answer and/or explain.
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H. Banks Company would like to design, produce, and sell versatile toasters for the home kitchen market. The toaster will have four slots that adjust in thickness to accommodate both slim slices of bread and oversized bagels. The target price is $65. Banks requires that new products be priced such that 24% of the price is profit. Required: If required, round your answers to two decimal places. 1. Calculate the amount of desired profit per unit of the new toaster.$fill in the blank 1 2. Calculate the target cost per unit of the new toaster.$fill in the blank 2
You own a furniture manufacturing company. You are looking to expand into glass furniture and need to buy new manufacturing equipment to manufacture this type of furniture. You have researched many suppliers but have found that two machines will best suit your needs. The cost of machine 1 is $90,000, and the cost of machine 2 is $110,000. The estimated net profits the machines will generate are in the attached image. a)Compare the ARR for both machines and decide which machine you should buy. b)Critically evaluate the ARR technique in evaluating investment options.
Ashley’s company is looking to add two new printers that will increase fixed costs by $75,000. The variable costs are $50 per order. The two new printers allow the business to increase their orders by 5000 annually. How many orders would have to be added to justify buying these new printers, vs not making any changes and continuing as they are? What other considerations might you consider in whether or not to make this purchase or not?
Imagine you are a manager of a snack food company. You need to decide whether you should manufacture a new mozzarella cheese curl or purchase it from another manufacturer and re-sell it to your customers. Consider the details below: You've already spent $150,000 on research and development costs to produce this new product in house. • Whether you manufacturer the cheese curl or buy from another manufacturer, you plan to support this new product with $75,000 in advertising and promotions. • If you decide to manufacturer the product, you would need to hire a line manager ($60,000 annual salary) Whether you manufacturer the cheese curl or buy from another manufacturer, you would still need to pay rent on the factory ($$72,000 annually) If you decide to manufacturer the product, raw materials and packaging would cost $0.50 per bag. • If you purchase or manufacture the product, you would need to pay a sales representative $0.05 per bag in sales commissions. If you purchased the product…
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