You are the owner and manager of The Smile, a small coffee shop located opposite to Baruch College and that serves coffee and sandwiches to staff, students and faculty. You pay $2500 per month for this space, which includes rent, utilities, and maintenance fees. To work alongside with you in the coffee shop, you employ three part-time baristas and pay each barista $8.75 per hour. The coffee shop typically serves between 1000 to 1200 customers and, depending on how busy the coffee shop is, each barista works between 80 to 100 hours per month. Typically in each month, 60 percent of the customers purchase coffee only, 10 percent purchase a sandwich only, and 30 percent purchase a coffee and a sandwich. Currently, you sell a cup of coffee for $5 and a sandwich for $10. Customers purchasing a cup of coffee with a sandwich are able to pay a discounted price of $14. To meet consumer demand, you regularly order ingredients such as coffee beans, milk, creamer, flavored syrups, deli meats, cheese, bread, and other sandwich and coffee ingredients. On average, the ingredients for each cup of coffee costs $1.25, while the ingredients for a sandwich costs $2.50. Last year, you purchased 2 espresso machines for $4000 that are customized specifically for your coffee shop. These were purchased during a final non-refundable sale and the machines are expected to last about 3 years. Recently, you received an offer to take on a marketing job that would pay you $2800 per month. However, accepting the position would mean hiring a fourth barista full-time with a monthly salary of $2000. Ultimately, you would like to know whether you should take the marketing job. Currently, with the increased enrollment and hiring at the college, you are optimistic that you will consistently have 1200 customers per month. Identify the fixed costs, variable costs, and sunk costs
You are the owner and manager of The Smile, a small coffee shop located opposite to Baruch College and that serves coffee and sandwiches to staff, students and faculty. You pay $2500 per month for this space, which includes rent, utilities, and maintenance fees. To work alongside with you in the coffee shop, you employ three part-time baristas and pay each barista $8.75 per hour. The coffee shop typically serves between 1000 to 1200 customers and, depending on how busy the coffee shop is, each barista works between 80 to 100 hours per month. Typically in each month, 60 percent of the customers purchase coffee only, 10 percent purchase a sandwich only, and 30 percent purchase a coffee and a sandwich. Currently, you sell a cup of coffee for $5 and a sandwich for $10. Customers purchasing a cup of coffee with a sandwich are able to pay a discounted price of $14. To meet consumer demand, you regularly order ingredients such as coffee beans, milk, creamer, flavored syrups, deli meats, cheese, bread, and other sandwich and coffee ingredients. On average, the ingredients for each cup of coffee costs $1.25, while the ingredients for a sandwich costs $2.50. Last year, you purchased 2 espresso machines for $4000 that are customized specifically for your coffee shop. These were purchased during a final non-refundable sale and the machines are expected to last about 3 years. Recently, you received an offer to take on a marketing job that would pay you $2800 per month. However, accepting the position would mean hiring a fourth barista full-time with a monthly salary of $2000. Ultimately, you would like to know whether you should take the marketing job.
Currently, with the increased enrollment and hiring at the college, you are optimistic that you will consistently have 1200 customers per month.
Identify the fixed costs, variable costs, and sunk costs
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