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Subway, the fast food restaurant franchise, recently announced it is bringing back the "$5 Footlong" promotion. Hundreds of Subway franchise owners are protesting the promotion, saying that they cannot afford to sell the footlong sub sandwiches for $5. Assume that the costs related to a Subway footlong and a Subway franchisee include the following: Cost per Cost item Details sandwich Food ingredients Per footlong 24 2.00 Labor $14.00/hour wage rate, Labor cost per footlong each worker can make 7 2.00 sandwiches per hour Credit card transaction fee 1.0% + $0.10 per transaction 0.15 $360 per month divided by 4,000 Electricity 0.09 orders per month Rent $1,200 per month divided by 4,000 orders per month Rent 0.30 Franchise and startup fees $36,000 divided by 180 months Franchise fee amortization 0.05 (15 years) divided by 4,000 orders per month Royalty fee 8.0% of sales 0.40 Advertising fee 4.5% of sales 0.23 $600 per month divided by 4,000 0.15 Equipment leasing cost orders

Subway, the fast food restaurant franchise, recently announced it is bringing back the "$5 Footlong" promotion. Hundreds of Subway franchise owners are protesting the promotion, saying that they cannot afford to sell the footlong sub sandwiches for $5. Assume that the costs related to a Subway footlong and a Subway franchisee include the following: Cost per Cost item Details sandwich Food ingredients Per footlong 24 2.00 Labor $14.00/hour wage rate, Labor cost per footlong each worker can make 7 2.00 sandwiches per hour Credit card transaction fee 1.0% + $0.10 per transaction 0.15 $360 per month divided by 4,000 Electricity 0.09 orders per month Rent $1,200 per month divided by 4,000 orders per month Rent 0.30 Franchise and startup fees $36,000 divided by 180 months Franchise fee amortization 0.05 (15 years) divided by 4,000 orders per month Royalty fee 8.0% of sales 0.40 Advertising fee 4.5% of sales 0.23 $600 per month divided by 4,000 0.15 Equipment leasing cost orders

FINANCIAL ACCOUNTING
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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Subway, the fast food restaurant franchise, recently announced it is bringing back the "$5 Footlong" promotion. Hundreds of Subway franchise owners are protesting the promotion, saying that they cannot afford to sell the footlong sub sandwiches for $5. Assume that the costs related to a Subway footlong and a Subway franchisee include the following: Cost per Cost item Details sandwich Food ingredients Per footlong 24 2.00 Labor $14.00/hour wage rate, Labor cost per footlong each worker can make 7 2.00 sandwiches per hour Credit card transaction fee 1.0% + $0.10 per transaction 0.15 $360 per month divided by 4,000 Electricity 0.09 or orders per month Rent $1,200 per month divided by Rent 0.30 4,000 orders per month Franchise and startup fees $36,000 divided by 180 months Franchise fee amortization 0.05 (15 years) divided by 4,000 orders per month Royalty fee 8.0% of sales 0.40 Advertising fee 4.5% of sales 0.23 $600 per month divided by 4,000 0.15 Equipment leasing cost orders Cost per footlong 5.37 శ శ్రీశ్రీశ్
Transcribed Image Text:Subway, the fast food restaurant franchise, recently announced it is bringing back the "$5 Footlong" promotion. Hundreds of Subway franchise owners are protesting the promotion, saying that they cannot afford to sell the footlong sub sandwiches for $5. Assume that the costs related to a Subway footlong and a Subway franchisee include the following: Cost per Cost item Details sandwich Food ingredients Per footlong 24 2.00 Labor $14.00/hour wage rate, Labor cost per footlong each worker can make 7 2.00 sandwiches per hour Credit card transaction fee 1.0% + $0.10 per transaction 0.15 $360 per month divided by 4,000 Electricity 0.09 or orders per month Rent $1,200 per month divided by Rent 0.30 4,000 orders per month Franchise and startup fees $36,000 divided by 180 months Franchise fee amortization 0.05 (15 years) divided by 4,000 orders per month Royalty fee 8.0% of sales 0.40 Advertising fee 4.5% of sales 0.23 $600 per month divided by 4,000 0.15 Equipment leasing cost orders Cost per footlong 5.37 శ శ్రీశ్రీశ్
Cost per footlong 2$ 5.37 sandwich # 3. Answer the following four questions. Be sure your posts are well written, complete, and proof read: 1. Define variable, fixed, and mixed costs. 2. Identify each of the listed costs of one footlong sub sandwich as either variable, fixed, or mixed. 3. What costs and factors do you think should be relevant to the footlong sub sandwich pricing decision? Explain. 4. Do you agree that a Subway franchisee would lose money for each footlong sold for $5? Why or why not? (NOTE: You must post first before you can see the other posts.)
Transcribed Image Text:Cost per footlong 2$ 5.37 sandwich # 3. Answer the following four questions. Be sure your posts are well written, complete, and proof read: 1. Define variable, fixed, and mixed costs. 2. Identify each of the listed costs of one footlong sub sandwich as either variable, fixed, or mixed. 3. What costs and factors do you think should be relevant to the footlong sub sandwich pricing decision? Explain. 4. Do you agree that a Subway franchisee would lose money for each footlong sold for $5? Why or why not? (NOTE: You must post first before you can see the other posts.)
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