Refer to Scenario 9

question 275

Multiple Choice

Refer to Scenario 9.10 below to answer the question(s) that follow.
SCENARIO 9.10: Investors put up $1,040,000 to construct a building and purchase all equipment for a new cafe. The investors expect to earn a minimum return of 10 percent on their investment. The cafe 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 $2,000 in other fixed costs. Variable costs include $2,000 in weekly wages, and $600 per week in materials, electricity, etc. The cafe charges $6 on average per meal.
-Refer to Scenario 9.10. In the short run, if the cafe decides to stay open, it will make weekly operating profits of

Understand the significance of operating income (EBIT) and net operating working capital.

Understand and calculate corporate tax liabilities and adjusted tax payments.

Analyze and compute total operating capital from balance sheets.

Determine the impact of depreciation changes on net after-tax income using tax and accounting principles.

Definitions:

Service Quality

Evaluating the degree to which a provided service meets the expectations of a customer.

Service Quality

The degree to which a service meets customers' expectations, often a crucial factor in customer satisfaction and loyalty.

Service Perceptions

The customer's view and evaluation of the quality and effectiveness of a service provided.

Instrumental Support

Providing the equipment or systems needed to perform a task in a job setting.