Joseph Giovine Owns a Successful Hole-In-The-Wall Bagel Shop Called Peach

question 13

Essay

Joseph Giovine owns a successful hole-in-the-wall bagel shop called Peach Tree Bagels. Joseph wants to expand the shop by leasing the space next door for $1,000 per month and adding tables and chairs so that customers can dine in. He figures that the tables and chairs will cost $5,000 and that the bagel machine, which cost $4,500 five years ago, will have to be scrapped in favour of a larger machine costing $7,400. He thinks sales will increase by $5,500 per month. Variable costs are 55% of sales.
Required:
A. What are the relevant costs and benefits of expanding into the new space?
B. What are the irrelevant costs and benefits of expanding into the new space?

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Definitions:

Servant Leadership

A leadership philosophy which emphasizes the leader's role as serving the needs of others first, promoting the growth and well-being of communities and individuals.

Follower Performance

Refers to the output or achievements of individuals who are guided and directed by leaders within an organization.

Societal Impact

The effect of an action or organization on the larger community or society, encompassing social, economic, and environment aspects.

Gifted

Possessing high intelligence (an IQ of 130 or higher) and/or superior talent in a particular area.