Bob’s Burgers Currently Produces and Sells 4000 Burgers Per Month $\begin{array}{ll}\text { Variable costs } & \$ .50 \text { per unit } \\\text { Fixed costs } & \$ 2000\end{array}$

question 24

Multiple Choice

Bob’s Burgers currently produces and sells 4000 burgers per month with the following costs:
$\begin{array}{ll}\text { Variable costs } & \$ .50 \text { per unit } \\\text { Fixed costs } & \$ 2000\end{array}$
Bob has recently switched food suppliers and anticipates that variable costs will decrease by $.05 per unit. In addition, Bob has renegotiated his store lease and fixed costs will be dropping by $40 per month.
-Bob anticipates selling 4200 burgers during the month of July.What will be estimated total costs during July?

• A) $3850
• B) $4000
• C) $4100
• D) $4410

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Definitions:

Variable Expenses

Expenses that fluctuate with the level of output or activity, in contrast to fixed expenses that remain constant regardless of activity level.

Net Operating Income

The earnings a business retains after subtracting operational costs, prior to the deduction of interest and taxes.

Total Contribution Margin

The difference between a company's sales revenue and variable costs, representing the amount available to cover fixed costs and contribute to profit.

Net Operating Income

A measure of a company's profitability excluding interest and tax expenses.