The QwikFill Corporation recently hired David Oxley to figure out ways to improve profit. David notes that,
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David offers two solutions. One is to eliminate the pump and save $1,200 each year. The second is to charge a quarter (25 cents) for each minute of operation. Currently, about 20 customers use the pump each day in any given gas station. The average customer takes about 3 minutes to check and inflate all tires.
Required:
a. At the current volume of operations, identify the increase in profit if David’s first proposal were to be implemented at all 243 of QwikFill’s stations. What is the profit with the second proposal?
b. Do you recommend following either of David’s proposals? Why or why not?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For
Managerial accounting
ISBN: 978-0471467854
1st edition
Authors: ramji balakrishnan, k. s i varamakrishnan, Geoffrey b. sprin
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