#1. Read or review the CVP concepts such as Variable Costs, Mixed Costs, and Fixed Costs. This would be in Chapter 6 of your textbook. #2. Read the following: Subway, the fast food restaurant franchise, recently announced it is bringing back the "$5 Footlong" promotion. Hundreds of Subway franchise owners are protesting the promotion, saying that they cannot afford to sell the footlong sub sandwiches for $5. Assume that the costs related to a Subway footlong and a Subway franchisee include the following: Cost per Cost item Details sandwich Food ingredients Per footlong $ 2.00 Labor cost per footlong Labor $14.00/hour wage rate, each worker can make 7 sandwiches per hour 2.00 Credit card transaction fee 1.0% + $0.10 per transaction 0.15 Electricity $360 per month divided by 4,000 orders per month 0.09 Rent Rent $1,200 per month divided by 4,000 orders per month 0.30 Franchise fee amortization Franchise and startup fees $36,000 divided by 180 months (15 years) divided by 4,000 orders per month 0.05 Royalty fee 8.0% of sales 0.40 Advertising fee 4.5% of sales 0.23 Equipment leasing cost $600 per month divided by 4,000 orders 0.15 Cost per footlong sandwich $ 5.37 #3. Answer the following four questions. Be sure your posts are well written, complete, and proof read: 1. Define variable, fixed, and mixed costs. 2. Identify each of the listed costs of one footlong sub sandwich as either variable, fixed, or mixed. 3. What costs and factors do you think should be relevant to the footlong sub sandwich pricing decision? Explain. 4. Do you agree that a Subway franchisee would lose money for each footlong sold for $5? Why or why not? (NOTE: You must post first before you can see the other posts.)