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30 July, 07:34

Investors put up $520,000 to construct a building and purchase all the equipment for a new restaurant. The investors expect to earn a minimum return of 10 percent on their investment. The restaurant is open 52 weeks per year and serves 900 meals per week. The fixed costs are spread over the 52 weeks (i. e. prorated weekly). Included in the fixed costs is the 10% return to the investors and $1,000 per week in other fixed costs. Variable costs include $1,000 in weekly wages and $600 per week for materials, electricity, etc. The restaurant charges $5 on average per meal. Total cost per week isA.$2,000. B. $1,000. C. $3,600. D. $1,600.

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  1. 30 July, 09:50
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    Total cost per week = $3600

    The correct option is C.$3,600.

    Explanation:

    Given:

    Cost for constructing and purchasing the equipment for restaurant = $520,000

    Minimum return = 10% of investment

    Restaurant is opened = 52 weeks per year

    No. of meals = 900 meals/per week

    Cost of meal = $5

    Expense for material and electricity = $600

    Expense for weekly wages = $1000

    Fixed cost per week = ([520,000 (.10) ]/52) + 1000 = 2000

    Variable cost = 1000 + 600 = 1600

    Total cost = Fixed cost per week + Variable cost

    = 2000+1600 = 3600.

    Total cost per week = $3600
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