The manager of a small gasoline station observes that while gasoline sales have been steady,the service side of the business has fallen off,and mechanics are often idle.He decides to offer a promotion - an oil change for $10 with a coupon mailed to 800 households in a 2-mile radius from his station.The $10 will just cover the costs of the oil change,and the cost of printing and mailing is $1,000.He hopes the promotion will increase regular maintenance service calls,which averages to $40.(Materials and labour per job cost $30.)If two hundred customers used the coupon,what will be the total cost of the promotion? (Disregard any opportunity costs.)
A)$200
B)$800
C)$1000
D)$1200

Question

Quizplus · Accepted Answer

The total cost of the promotion is the cost of printing and mailing the coupons plus the cost of the oil changes. The cost of printing and mailing is $1,000, and the cost of the oil changes is $10 per oil change. If 200 customers used the coupon, the total cost of the oil changes is $200 x $10 = $2,000. Therefore, the total cost of the promotion is $1,000 + $2,000 = $3,000.

The Manager of a Small Gasoline Station Observes That While