The owner of Spicy's Gourmet Popcorn is concerned because the stand has been averaging sales of only 7,500 cartons per month,the stand and staff can make 15,000 cartons of popcorn per month.The variable cost of each carton is $1.50.Monthly fixed costs are ( taxes,licenses,space rent and salaries)are $10,000.The owner wants cost information about different volumes so that he can make some operating decisions.
Required: Fill in the following chart to provide Bob with the information he wants.
Definitions:
Payback Period
The amount of time it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment.
Hurdle Rate
The minimum rate of return on an investment that a company or investor expects to earn, used as a benchmark for funding projects.
Capital Outlay
Expenditure for acquiring, maintaining, or improving fixed assets such as buildings, equipment, or land, that have a long-term use or value.
Capital Budgeting
The process of evaluating and selecting long-term investments that are in line with the goal of shareholder wealth maximization.
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