Refer to Scenario 9

question 240

Multiple Choice

Refer to Scenario 9.6 below to answer the question(s) that follow.
SCENARIO 9.6: Celeste borrowed $40,000 from her brother to open a car wash. She pays her brother a 5% yearly return on the money he lent her. Her other yearly fixed costs equal $18,000. Her variable costs equal $40,000. In her first year, Amy sold 40,000 car washes at a price of $2.50 per car wash.
-Refer to Scenario 9.6. Celeste's total costs equal

• A) $20,000.
• B) $40,000.
• C) $60,000.
• D) $100,000.

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Definitions:

Annual Revenue

The total amount of money earned from the sale of goods or services in a fiscal year before any expenses are subtracted.

Annual Expenses

The total amount of money spent or costs incurred by a business or individual in a one-year period.

Capital Budgeting

The process by which an organization evaluates and selects long-term investments that are in line with their goal of wealth maximization.

Long-term Decisions

Decisions that impact an organization over an extended period, usually beyond one year, involving investments, strategic direction, and structural changes.