Refer to Scenario 9

question 85

Multiple Choice

Refer to Scenario 9.3 below to answer the question(s) that follow.
SCENARIO 9.3: Investors put up $520,000 to construct a building and purchase all equipment for a new restaurant. The investors expect to earn a minimum return of 10 per cent 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.
-Refer to Scenario 9.3. If the restaurant were to shut down, losses per week would be

• A) $1,000.
• B) $1,600.
• C) $2,000.
• D) $3,600.

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Definitions:

Logistics Management

The process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption.

Point of Origin

The location or source from where a product, service, or shipment begins its movement or is created.

Point of Consumption

The place or moment where a product or service is actually used or consumed by the end user.

Clayton Act

A U.S. federal law aimed at promoting competition and preventing anti-competitive practices in their inception.