Chapter$-8$

Practice Problem $2($pg$.373)$

$($Please provide your solution to this practice problem showing your calculations with explanations as

necessary.$)$

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 $$1\mathrm{.}76$ per sandwich. Sandwiches sell for $$8$ each in all locations. Rent and

equipment costs would be $$5,000$ per month for location $A,$$$5,500$ per month for location $B,$ and $$5,800$

per month for location $C.$

Given: We have the following information shown below for three potential locations for a new outlet:

a$.$ Determine the monthly volume necessary at each location to realize a monthly profit of $$10,000$

$($show your calculations and round to $1$ decimal$).$

$Q=\frac{\text{S}\text{p}\text{e}\text{c}\text{i}\text{f}\text{i}\text{e}\text{d}\text{p}\text{r}\text{o}\text{f}\text{i}\text{t}+FC}{R-v}$

Location A Volume:

Location B Volume:

Location C Volume:

b$.$ Determine the expected profits at each facility given the expected monthly volumes:

$21,000$ per month, $B=22,000$ per month, and $C=23,000$ per month. Which location would yield

the greatest profits? Show your calculations.

Profit $=Q_{R-v}{?}_{-}FC$

Location A:

Location B:

Location C: