Refer to Scenario 9.4 below to answer the question(s) that follow.
SCENARIO 9.4: Sponsors invest $100,000 in a new deli on the promise that they will earn a return of 10% per year on their investment. The deli sells 52,000 sandwiches per year. The deli's fixed costs include the return to investors and $42,000 in other fixed costs. Variable costs consist of wages ($1,000 per week) plus materials, electricity, etc. ($2,000 per week). The deli is open 52 weeks per year.
-Refer to Scenario 9.4. The annual total costs of the deli are
A) $42,000.
B) $52,000.
C) $156,000.
D) $208,000.

Question

Quizplus · Accepted Answer

The annual total costs include the return to investors ($10,000, which is 10% of $100,000), other fixed costs ($42,000), and variable costs (wages and materials/electricity, which total $3,000 per week for 52 weeks, equaling $156,000). Adding these together: $10,000 + $42,000 + $156,000 = $208,000.