Raymond estimates that the fixed costs associated with opening a new bank branch are $500 ,000.He expects the branch to attract 1,000 new customer accounts in the first year,each of which will cost $50 per year to service.He also expects to generate $100,000 per year in revenue.For Raymond,the total cost of opening the new branch and remaining open for one year will be
A) $500
,000.
B) $550
,000.
C) $650
,000.
D) $450
,000.
E) $605
,000.

Question

Quizplus · Accepted Answer

The total cost includes the fixed costs ($500,000) plus the variable costs associated with servicing the new customer accounts (1,000 accounts * $50/account = $50,000), totaling $550,000.

Raymond Estimates That the Fixed Costs Associated with Opening a New