Sam Hutchins is planning to operate a specialty bagel sandwich kiosk but is undecided about whether to locate in the downtown shopping plaza or in a suburbanshopping mall. Based on the following data, which location would you recommend?LocationDowntownSuburbanAnnual rent, including utilities$10,500$7,250Expected annual demand (sandwiches)37,50023,500Average variable costs per sandwich$1.25$1.20Average selling price per sandwich$3.15$2.80Expected annual profits from the Downtown location are $(Enter your response as an integer.)Expected annual profits from the Suburban location are $. (Enter your response as an integer.)Therefore, theV location should be recommended.

Answered: Sam Hutchins is planning to operate a…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Related questions

Question

Sam Hutchins is planning to operate a specialty bagel sandwich kiosk but is undecided about whether to locate in the downtown shopping plaza or in a suburban
shopping mall. Based on the following data, which location would you recommend?
Location
Downtown
Suburban
Annual rent, including utilities
$10,500
$7,250
Expected annual demand (sandwiches)
37,500
23,500
Average variable costs per sandwich
$1.25
$1.20
Average selling price per sandwich
$3.15
$2.80
Expected annual profits from the Downtown location are $
(Enter your response as an integer.)
Expected annual profits from the Suburban location are $. (Enter your response as an integer.)
Therefore, the
V location should be recommended.

Expert Solution

Step 1 : Introduction

Total Cost :-

Total price is the full expenditure incurred to provide a few sort of output. From an accounting perspective, the full price idea is extra relevant to economic reporting, wherein overhead fees need to be assigned to positive assets. Total price is much less relevant to short-time period choice making, wherein it's miles much more likely that best variable fees might be considered. In general, it's miles the maximum complete view of invested funds. The opportunity definitions for general price are stated below.

$T o t a l C o s t s = F i x e d \cos t + V a r i a b l e C o s t s$