The owner of Genuine Subs, Inc.. hopes to expand the present operation by adding one new outlet. She has studied three locations. Each would have the same labor and materials costs (food, serving containers, napkins, etc.) of $1.60 cents per sandwich. Sandwiches sell for $2.52 each in all locations. Rent and equipment costs would be $5,080 per month for location A, $5,550 per month for location B, and $5,750 per month for location C. a. Determine the volume necessary at each location to realize a monthly profit of $10,500. (Do not round intermediate calculations. Round your answer to the nearest whole number.) Location Monthly Volume b-1. If expected sales at A, B. and C are 20500 per month, 22,400 per month, and 22.500 per month, respectively, calculate the profit of the each locations? b-2. Which location would yield the greatest profits? Location A Location C Location B Solution a) Volume required for break even at shop A = (5080+10500)/(2.52-1.60) =16934.78 units Volume required for break even at shop B = (5550+10500)/(2.52-1.60) =17445.65 units Volume required for break even at shop C = (5750+10500)/(2.52-1.60) =17663.04 units ----------- b Profit a shop A = 20500*(2.52-1.60)-5080 =$13780 Profit a shop B = 22400*(2.52-1.60)-5550 =$15058 Profit a shop A = 22500*(2.52-1.60)-5750 =$14950 ----------- Location B would yiled the highest profit.

1. The owner of Genuine Subs, Inc.. hopes to expand the present operation by adding one new
outlet. She has studied three locations. Each would have the same labor and materials costs
(food, serving containers, napkins, etc.) of $1.60 cents per sandwich. Sandwiches sell for $2.52
each in all locations. Rent and equipment costs would be $5,080 per month for location A,
$5,550 per month for location B, and $5,750 per month for location C. a. Determine the volume
necessary at each location to realize a monthly profit of $10,500. (Do not round intermediate
calculations. Round your answer to the nearest whole number.) Location Monthly Volume b-1. If
expected sales at A, B. and C are 20500 per month, 22,400 per month, and 22.500 per month,
respectively, calculate the profit of the each locations? b-2. Which location would yield the
greatest profits? Location A Location C Location B
Solution
a) Volume required for break even at shop A = (5080+10500)/(2.52-1.60)
=16934.78 units
Volume required for break even at shop B = (5550+10500)/(2.52-1.60)
=17445.65 units
Volume required for break even at shop C = (5750+10500)/(2.52-1.60)
=17663.04 units
-----------
b Profit a shop A = 20500*(2.52-1.60)-5080
=$13780
Profit a shop B = 22400*(2.52-1.60)-5550
=$15058
Profit a shop A = 22500*(2.52-1.60)-5750
=$14950
-----------
Location B would yiled the highest profit