Question

SCENARIO 9.1: 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. 45) Refer to Scenario 9.1. Amy's total fixed costs equal _____. 46) Refer to Scenario 9.1. Amy's total costs equal _______. 47) If revenues exceed ________, profit is ________.

Answer 1

Answer:

45: $10,000

46: $40,000

47: $20,000

Explanation:

Total fixed cost of Amy =

TFC = yearly fixed cost + 5% of $20,000

TFC = $9,000 + $1,000

TFC = $10,000

Total cost =

TC = Variable cost + total fixed cost

TC = $30,000 + $10,000

TC = $40,000

The total profit she accrued is the difference between the total cost and the money she'd borrowed from her parents.

$40,000 - $20,000 = $20,000

Therefore, the total profit of Amy is $20,000