Refer to Scenario 9

question 198

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. If the bakery were to shut down, losses per week would be

• A) $2,000.
• B) $3,600.
• C) $4,000.
• D) $7,200.

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Definitions:

Morality

Rules that differentiate between what is considered morally correct and incorrect conduct.

Psychological Egoism

The hypothesis positing that people are consistently driven by their own self-interest, even when their actions appear to be altruistic.

Ethical Egoism

A moral philosophy that posits individuals should act in ways that serve their own self-interest.

Ancient Societies

Civilizations or cultures that existed in the distant past, often characterized by their contributions to history, art, and knowledge.