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 costs equal
A) $20,000.
B) $40,000.
C) $60,000.
D) $80,000.

Question

Quizplus · Accepted Answer

Julio's total costs include the yearly fixed costs, the variable costs, and the interest he owes his great aunt. The yearly fixed costs are $16,000, the variable costs are $60,000, and the interest on the loan (5% of $80,000) is $4,000. Adding these together gives $16,000 + $60,000 + $4,000 = $80,000.