Ice cream Case The following is a description of the decisions made in 2000 by the owner of a small ice cream parlor in San Juan. After being a year in the business. The owner wonders if she should stay in business. Foosts of the firm the costs that are faced are the following: Fixed costs From the fixed monthly costs the following can be identified: (1,150 pies2).......................... $2,012.50 Rental of facilities Electric $325.00 Interest on loan $737.50 banking... $295.00 Maintenance $65.00 Tota $3,435.00 in addition to being running her business, the owner is failing to earn $30,000 a year 2,500 monthly) Not all of the items mentioned above are strictly fixed because the use of electricity may depend on having the business operating for a longer time, which would increase the cost of electricity. It is assumed fixed because its changes will be small. Variable Costs We have two types of variable costs: 1) public service costs 2) the cost of producing ice cream. The ice cream shop hires 2 high school students who each pay $5.15 an hour. However, in the end the hourly labor cost is 5.54 after including the social security tax that is assumed by the investor. The two employees work permanently. The cost of producing ice cream is 3.27 per gallon. Each gallon yields approximately 12 servings. In addition, customers can add "toppings" at no cost. Toppings on average NSERT Ice cream Case The following is a description of the decisions made in 2000 by the owner of a small ice cream parlor in San Juan. After being a year in the business. The owner wonders if she should stay in business. Foosts of the firm the costs that are faced are the following: Fixed costs From the fixed monthly costs the following can be identified: (1,150 pies2).......................... $2,012.50 Rental of facilities Electric $325.00 Interest on loan $737.50 banking... $295.00 Maintenance $65.00 Tota $3,435.00 in addition to being running her business, the owner is failing to earn $30,000 a year 2,500 monthly) Not all of the items mentioned above are strictly fixed because the use of electricity may depend on having the business operating for a longer time, which would increase the cost of electricity. It is assumed fixed because its changes will be small. Variable Costs We have two types of variable costs: 1) public service costs 2) the cost of producing ice cream. The ice cream shop hires 2 high school students who each pay $5.15 an hour. However, in the end the hourly labor cost is 5.54 after including the social security tax that is assumed by the investor. The two employees work permanently. The cost of producing ice cream is 3.27 per gallon. Each gallon yields approximately 12 servings. In addition, customers can add "toppings" at no cost. Toppings on average NSERT
