Refer to Scenario 9

question 72

Multiple Choice

Refer to Scenario 9.4 below to answer the question(s) that follow.
SCENARIO 9.4: Sponsors invest $100,000 in a new deli on the promise that they will earn a return of 10% per year on their investment. The deli sells 52,000 sandwiches per year. The deli's fixed costs include the return to investors and $42,000 in other fixed costs. Variable costs consist of wages ($1,000 per week) plus materials, electricity, etc. ($2,000 per week) . The deli is open 52 weeks per year.
-Refer to Scenario 9.4. The annual fixed costs of the deli are

• A) $10,000.
• B) $42,000.
• C) $52,000.
• D) $156,000.

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Definitions:

Projected

Refers to estimates or forecasts of future financial outcomes, performance, or trends based on current data and analysis.

Earnings Before Interest

Earnings Before Interest, often abbreviated as EBI, refers to a company's profit before any interest expenses are deducted. It shows the financial performance from operational activities.

CCA Class

Refers to a classification under the Canadian Capital Cost Allowance that groups assets of a similar nature for depreciation purposes.

Net Working Capital

The gap between a business's current resources and its present debts, showcasing its financial stability in the near term.