Ariel LeBec, of Ariel’s Sandwich Shoppe, sells sandwiches and soda from a sidewalk cart in a popular park near her home in New Orleans. She sets up her rented cart in the summers to raise money for college. Last month she sold $6,000 worth of product (sandwiches and sodas) to 300 customers. She spent $1,200 on the sandwich ingredients and buying the sodas wholesale. Her monthly costs are the following: Utilities = $100, Salary = $2,000, Advertising = $150, Insurance = $50, Interest = $0 Depreciation=$0, Interest = $0, Rent = $500.

a. What are Ariel’s variable costs? Explain.

b. What is Ariel’s COGS? Explain.

c. What are her other variable costs? Explain.

d. What are her fixed costs? Explain.

e. What is Ariel’s EOU?

f. How much cash reserve should she keep in the bank?