Consider the following information in answering the next questions. Schlotzsky's, an Austin-based upscale sandwich restaurant, has recently released financial information relating to franchise store opportunities.' The estimated fixed acquisition cost of the franchise would be $300,000. The franchise acquisition will be depreciated on a straight-line basis over ten years. The following revenue and expense estimates for a new franchise store, annually would be: in $000s Sales 1,500 Ingredients 375 Crew Labor (hourly) 345 Management and Other Store Overhead Costs (fixed) 195 Selling, General and Administrative Costs(fixed) 255 Product Discounts (variable in proportion to Sales) 60 Although not mentioned at the Schlotzskys website, it is generally known that Schlotzskys charges a franchise royalty fee (which represents a cost in addition to the costs listed above) on a negotiated basis. On average, in the past, the fee has been 5% of sales over and above the breakeven sales, but it can vary depending on negotiations between Schlotzskys and the franchisee. A typical Schlotzsky's store has on average 55 employees and about 3,700 square feet of floor space. In the most recent Austin Chronicle readers' poll Schlotzskys was named by loyal customers as "Best Lunch Hour Spot" for its swift service and good group accommodations, and "Best Restaurant for Kids" for its nutritious food and, in many cases, "cyber-deli" counters. In the Schlotzkys stores that contain the "cyber-deli" counters, customers can surf iMacs and flat-screen PCs with Internet access. Customers can e-mail friends or follow homepage links to the nation's top newspapers and their children can play computer games without charge. Schlotzky's CEO has been quoted as saying, "We think this is the restaurant playground of the future". Possible estimates of the costs of outfitting stores with "cyber-deli" counters, incremental to the cost estimates listed above include: Desktop Computer, including installation costs $2,000 each, annually Internet costs (irrespective of the number of connections) $100 monthly Total incremental sales attributable to "cyber-deli" for 1 desktop $12,000 annually Total incremental sales attributable to "cyber-deli" for 2 desktops $17,000 annuallyOzzie.com is considering a new compensation plan to motivate executives to work hard at ensuring that customers are satisfied and that Ozzie.com's financial performance is sound. The proposed scheme is structured as follows: Executive Compensation = Fixed Wage + [5, 000 x (A + B)], if (A+ B) > 0 Fixed Wage Only, if (A + B)