The As-You-Like-It Hamburger Shop Is Considering Adding a New Location

question 12

Multiple Choice

The As-You-Like-It Hamburger Shop is considering adding a new location. The investment at each of the four potential sites is the same. The price they can charge for hamburgers is set by the competition in the area. Given the information below, which site is expected to be the most profitable (i.e., net profit) ?
$\begin{array}{lcccr}\text { Factor }&\text { Site A }&\text { Site B }&\text { Site C }&\text { Site D }\\\text { Fixed Cost } & \$ 10,000 & \$ 8,000 & \$ 6,000 & \$ 11,000 \\\text { Variable Cost per Unit } & \$ 0.70 & \$ 0.70 & \$ 0.85 & \$ 0.65 \\\text { Price per Unit } & \$ 1.30 & \$ 1.20 & \$ 1.25 & \$ 1.10 \\\text { Forecast Volume (Units) } & 20,000 & 22,000 & 18,000 & 24,000\end{array}$

• A) Site A
• B) Site B
• C) Site C
• D) Site D

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