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Paraphin [41]
3 years ago
9

A profit-maximizing decision must be made about whether to keep a bed & breakfast operating. Until the place sells, the mort

gage of $3000/month must be paid, since it is a sunk cost. If the restaurant operates, costs rise by $4000 per month, but revenue will be only $6000 per month. Until the building can be sold,
a.it is best to shut down the bed & breakfast since it is taking a loss.
b.it is best to ignore sunk costs and keep the bed & breakfast operating.
c.it is best to shut down the bed & breakfast even though it is making a profit
d.it is best to keep the bed & breakfast operating because it is profitable.
Business
1 answer:
artcher [175]3 years ago
5 0

Answer:

b.it is best to ignore sunk costs and keep the bed & breakfast operating.

Explanation:

The owner of the store will face the mortgage cost wether the bed and breakfast is open or closed therefore it should be ignore in the short-term for the decision wether or not to keep the business open.

The business revenues are 6,000 while their cost 4,000 thie means there is a contribution of 2,000 then we subtract the mortage to get a loss 1,000

If closed the losses will increase to 3,000 asthe mortage expense would not disappear.

We should keep it open and look for ways to either sale or rent the space for a better gain than 2,000

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Answer:

See calculations below

Explanation:

With regards to the above we'll simply add back the given depreciation to the net profit for 2018

= Net income $1,090,000 + depreciation

$290,000

= $1,358,000

Cash flow for 201 is $1,358,000

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2 years ago
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Read the Leading Innovation and Change: Best Practices Case Study and answer the following in the Lesson Forum: What elements of
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The correct answer to this open question is the following.

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This case refers to the challenges faced by an organization when it is time to innovate. Many members want to innovate but the culture of the company or the lack of proper leadership from managers often hinders the innovation efforts of the company.

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6 0
2 years ago
In 1895, the winner of a competition was paid $150. In 2006, the winner's prize was $70,000. What will the winner's prize be in
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Answer:

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3 years ago
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Answer and Explanation:

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4 0
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