2-page document, explain the impact of this decision. Be sure to address the following:
How much is the business paying out versus how much it is taking in? When approaching decisions from a linear profit model, the total costs of your expenses versus the profit you bring in helps decision makers determine the viability of potential options.
Think about your personal budget: If you make x amount of money from your job (your “take inâ€) and you want to add a new or different expense into your finances (what you “pay outâ€), a linear profit model can help calculate the feasibility of this option.
Consider how calculations are an essential asset to decision making, especially when using a linear profit model. Think about how a difference in calculation can impact a short-term decision or major change in a business.
Examine cost behaviors and decision-making scenarios using the linear profit model. Write 2 pages on each, looking at the presented finances and providing recommendations on potential improvements.
Baker Consolidated
Baker Consolidated operates a cafeteria for its employees. The operation of the cafeteria requires fixed costs of $4,700 per month and variable costs of 40% of sales. Cafeteria sales are currently averaging $12,000 per month.
Baker has an opportunity to replace the cafeteria with vending machines. Gross customer spending at the vending machines is estimated to be 40% greater than current sales, because the machines are available at all hours. By replacing the cafeteria with vending machines, Baker would receive 16% of gross customer spending and avoid all cafeteria costs. In a poll, employees did not express a preference for one option over the other.
1 day ago
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