Question

Martha estimates that the fixed costs associated with opening her new hair salon are $100,000. She expects the salon to attract 500 new customers in the first year, each of which will cost $25 to service. Martha expects to generate $50,000 per year in revenue. For Martha, the total cost of opening her hair salon and staying in business for one year will be

Answer 1

Answer:

$112,500

Explanation:

In the question above, the fixed costs are = $100,000.

variable costs are = $25 each customer. If she expects the footfall of customers to be 500 in an yearn, then the total variable cost = 500*25 = $12500.

Total costs = 100000 + 12500 = $112500.