Question
Joes Airport Cafe sells sandwiches for $5. The variable cost per sandwich is $3. The company incurs $50,000 of fixed costs per year. The company
Joes Airport Cafe sells sandwiches for $5. The variable cost per sandwich is $3. The company incurs $50,000 of fixed costs per year. The company expects to sell 40,000 sandwiches in the coming year.
a. Based on these data, prepare a static budget for the coming year.
b. Holding all other factors constant, how would net income differ from the static budget if fixed costs were 10 percent higher than expected? c. Holding all other factors constant, how would net income differ from the static budget if fixed costs were 10 percent lower than expected? d. Holding all other factors constant, how would net income differ from the static budget if variable costs were 10 percent higher than expected? e. Holding all other factors constant, how would net income differ from the static budget if variable costs were 10 percent lower than expected
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