Refer to Scenario 9.7 below to answer the question(s) that follow.
SCENARIO 9.7: Julio borrowed $80,000 from his great aunt to open a coffee stand at a local flea market. He agrees to pay his great aunt a 5% yearly return on the money she lent him. His other yearly fixed costs equal $16,000. His variable costs equal $60,000. He sold 50,000 cups of coffee during the year at a price of $3.00 per cup.
-Refer to Scenario 9.7. Julio's total fixed costs equal
A) $4,000.
B) $16,000.
C) $20,000.
D) $80,000.

Question

Quizplus · Accepted Answer

Julio's total fixed costs include the yearly return he must pay his great aunt (5% of $80,000 = $4,000) plus his other yearly fixed costs ($16,000). Therefore, his total fixed costs are $4,000 + $16,000 = $20,000.