Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Each month, the owner of Brown Bear Car Wash pays $3,500 in rent, $700 in utilities, $650 interest on the business loan, an insurance premium

Each month, the owner of Brown Bear Car Wash pays $3,500 in rent, $700 in utilities, $650 interest on the business loan, an insurance premium of $150, and $400 on advertising on local bus routes. A full-service car wash is priced at $11.50. Unit variable costs for the car wash are $7.50. At what level oftotal revenuewill the car washbreak even?

One year later, the owner of the Brown Bear car wash realized that its advertisement on local bus routes was not very effective so she decided to stop spending money on the advertising. Instead, she decided to lower the price of the car wash to $9.00 in the hope that the lower price will attract more customers to the car wash. In addition, the owner decided to switch the detergent to a new highly efficient detergent that saves the car wash $0.20 per wash. Compared to the old plan,how many more or less car washdoes the Brown Bear car Wash need in order tobreak even under this new plan?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles of Marketing

Authors: Philip Kotler, Gary Armstrong

13th Edition

0136079415, 978-0136079415

More Books

Students also viewed these Marketing questions