You own a restaurant and just negotiated a decrease in the cost of steaks by 25 cents a steak.You normally sell 300,000 steak dinners a year.Your business pays an average of 30 percent in income taxes.What is the annual benefit of this increased efficiency?

Question

Quizplus · Accepted Answer

The annual benefit of the decreased cost of steaks can be calculated as follows:

$0.25 decrease per steak * 300,000 steaks = $75,000

However, the business pays 30% in income taxes, so the actual benefit is:

$75,000 * 0.7 = $52,500

Therefore, the correct answer is C) $52,500.

You Own a Restaurant and Just Negotiated a Decrease in the Cost