Essay
The owner of Fat Man's Sausage Cart is concerned because the stand has been averaging only 5,500 sausage sales per month, the stand and staff can make 7,000 sausages on a bun per month. The variable cost of each sausage (buns, meat etc.) is $3.50. Monthly fixed costs are (taxes, licenses, space rent and salaries) are $10,000. The owner (Big Bob) believes he could sell 7,000 sausages per month if he cuts the sales price from $7.50 to $7.00 per sausage. How much extra profit (above the current level) would he generate if he decreased the sales price?
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New profit = (7,000 × $7.00) -...View Answer
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