Refer to Scenario 9.9 below to answer the question(s) that follow.
SCENARIO 9.9: Sponsors invest $250,000 in a new greeting card business on the promise that they will earn a return of 10% per year on their investment. The business sells 52,000 greeting cards per year. The fixed costs for the business include the return to investors and $79,000 in other fixed costs. Variable costs consist of wages ($1,000 per week) plus materials, electricity, etc. ($3,000 per week). The business is open 52 weeks per year.
-Refer to Scenario 9.9. The annual total costs for the business sum to
A) $79,000.
B) $104,000.
C) $208,000.
D) $312,000.

Question

Quizplus · Accepted Answer

The annual total costs include the return to investors ($25,000), other fixed costs ($79,000), and variable costs (wages and materials, etc., which total $4,000 per week for 52 weeks, or $208,000 annually). Adding these together: $25,000 + $79,000 + $208,000 = $312,000.