Task:
Big Kahuna Burgers expects its four locations to yield the following income next year.
|
Location opened:
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7/4/1999 5/14/1992 8/6/2006
Raymond State Street Broadmo Avenueor
|
2/4/2011 Park Lane
|
|
Sales
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$140,500
|
$90,400
|
$67,400
|
$117,900
|
|
Expenses.
|
|
|
|
|
|
Avoidable
|
16,500
|
8,810
|
8,285
|
32,450
|
|
Unavoidable
|
76,300
|
74,100
|
58,900
|
97,500
|
|
Total Expenses
|
92,800
|
82,910
|
67,185
|
129,950
|
|
Net Income (Loss)
|
$47,700
|
$7,490
|
$215
|
($12,050)
|
Sarah Goldberg, the company's CEO, has been concerned about the consistent losses with their newest location and is considering elminating it.
Should Big Kahuna elminate the Park Lane location? Why or why not?
A. The Park Lane location should be kept open because its unavoidable expenses would cause the company to experience an overall net loss of $42,095 should it be closed.
B. The Park Lane location should be closed. Even though the losses were greater one year ago it has been incurring losses since it was opened
C. The Park lane location should be kept open because its expenses of $129,950 would have to be borne by the other three locations if closed
D. The Park lane location should be closed because the overall net income of the company would increase to $55,405 after elimination