Question

Amy borrowed​ $20,000 from her parents to open a bagel shop. She pays her parents a​ 5% yearly return on the money they lent her. Her other yearly fixed costs equal​ $9,000. Her variable costs equal​ $30,000. In her first​ year, Amy sold​ 40,000 dozen at a price of​ $1.50 per dozen. ​Amy's total fixed costs equal _________.A) $1,000.
B) $9,000.
C) $10,000.
D) $21,000.

Answer 1

Answer:

Amy's total fixed cost in this case is $10,000.

Explanation:

Amy's variable cost is given as $30,000 and a part if her annual fixed cost is $9000.She is supposed to pay 5% of the yearly return on $20000 that she borrowed from her parents.

Hence,Amy's yearly return on the money borrowed from her parents=$(20000\times 0.05)=1000 dollars$

Amy has to pay a fixed amount of $1000 to her parents every year.

Therefore,Amy's total fixed cost at the end of the year=$(9000+1000)=10000dollars$ or $10,000.

Therefore,Amy's total yearly fixed cost is $10,000.