Refer to Scenario 9

question 214

Multiple Choice

Refer to Scenario 9.8 below to answer the question(s) that follow.
SCENARIO 9.8: Investors put up $1,040,000 to construct a building and purchase all equipment for a new gourmet cupcake bakery. The investors expect to earn a minimum return of 10 per cent on their investment. The bakery is open 52 weeks per year and sells 900 cupcakes 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 $2,000 in other fixed costs. Variable costs include $2,000 in weekly wages, and $600 per week in materials, electricity, etc. The bakery charges $8 on average per cupcake.
-Refer to Scenario 9.8. The bakery is making ________ economic profits per week.

• A) positive
• B) zero
• C) negative
• D) break-even

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Definitions:

Empowerment

The act of giving power or authority to individuals or groups, enabling them to make decisions and take actions independently.

Work Team

A group of individuals working collaboratively towards a shared objective, often with complementary skills and roles.

Managers

Individuals in an organization responsible for directing, controlling, and overseeing the work of others to achieve the organization's goals efficiently and effectively.