*** Sue, of Sue's Sandwiches, sells sandwiches and soda from a sidewalk cart in a popular park near her home. She sets up her rented cart in the summers to raise money for college. Last month she sold $3,000 worth of product (sandwiches and sodas) to 300 customers. She spent $600 on the sandwich ingredients and buying the sodas wholesale. Her monthly costs are the following: Utilities = $60, Salary = $1,500, Advertising = $0, Insurance = $50, Interest = $0, Rent = $300, Depreciation = $0.

a. What are Sue's variable costs? Explain.

b. What is Sue's COGS? Explain.

c. What are her other variable costs? Explain.

d. What are her fixed costs? Explain.

e. What is Sue's EOU?

f. How much cash reserve should she keep in the bank?

2.

***Given the following data, on a separate sheet of paper create monthly and yearly income statements for this fast-food restaurant in New York City.

a. Sales for the month of June were $300,000. Sales for the year were $2,600,000.

b. The sum of $66,000 was spent on food in June (it was $792,000 for the year). The store spent $9,000 on paper to wrap food items in June and $108,000 for the year.

c. Taxes for June were $15,000. For the year, taxes were $233,000.

d. Fixed operating costs for June were $175,000. Operating costs for the year were $1,000,000.

e. Use Excel (or MS Small Business Financial Manager) to create a graph showing the monthly and yearly income statements for this business.

2. If the owner of this fast-food restaurant spent $300,000 on start-up costs, what was his ROI for the year?

3. Calculate the financial ratios (ROI and ROS) for both the monthly and the yearly income statement. What do the financial ratios tell you about this business?

4. What would the profit before taxes be if the owner finds a paper supplier that only charges $100,000 for the year?

5. What would the profit margin for the year be in that case?

6. Suppose you wanted to raise profits by $5,000 a month. What would you do, and why?