The fixed components of the store's monthly cost include the following: Rent (1,1150 Square feet) $2,012.50 Electricity

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Question:

The fixed components of the store's monthly cost include the following:

Rent (1,1150 Square feet) $2,012.50

Electricity $325.00

Interest on loan $737.50

Maintenance $295.00

Telephone $65.00

Total: $3,435.00

**Not all the items on this list are strickly fixed, however, Electricity costs, for example, would be slightly higher if the store produced more ice cream and stayed open longer, but the added cost would be minimal.

Variable Costs

The ice cream store's variable costs include two components: (1) behind the counter labor costs and (2) cost of making ice cream.The store hires employees at a wage of$5.54 per hour.Two employees work in the store all times.The full cost of producing ice cream is $3.27 per gallon.Each gallon contains approximately 12 servings.Customers can add toppings free of charge, and the average cost of toppings taken by a customer is about $.05:

Gross labor costs $5.54/ hour

Costs of producing one gallon of ice cream (12 servings per gallon) $3.27

Average cost of added toppings per serving $.05

Revenues

The store sells ice cream cones, sundaes, and floats.The average price of a purchase at the store is $1.45.The store is open 8 hours per day, 26 days a month, and serves an average of 240 customers per day:

Average purchase $1.45

Days open per month 26

Average number of customers per day 240

From the total preceding information, it is possible to calculate the store's average monthly profit.Total revenue is equal to 240 customers x $1.45 per customer x 26 days open in an average month TR=$9,048 per month.

1.What are the Monthly Economic Profits? (Please show all work legible or excel)

2.Should she work longer hours? (Please show all work legible or excel)

The store's normal hours of operation are noon until 8 P.M. On an experimental basis, the owner extends its hours until 11 P.M. for 1 month. The following table shows the average number of additional customers for each of added hours:

Hours (P.M.)8-99-1010-11

Customers41208