Last month, Sue, of Sue's Sandwiches, sold $3,000 worth of product (sandwiches and sodas) from her sidewalk cart to 300 customers. She spent $600 on the sandwich ingredients and buying the sodas wholesale. Her monthly costs are the following: Utilities = $60, Salary = $1,500, Advertising = $0, Insurance = $50, Interest = $0, Rent (for the cart) = $300, Depreciation = $0.
a. What are Sue's variable costs? Explain.
b. What is Sue's COGS? Explain.
c. What are her other variable costs? Explain.
d. What are her fixed costs? Explain.
e. What is Sue's EOU?
f. How much cash revenue should she keep in the bank?
Last month, Sue, of sue's sandwiches, sold $3000 worth of product(sandwiches and sodas) from her sidewalk cart to 300 customers. She spent $600 on the sandwich ingredients and buying the sodas wholesale. Her monthly costs are the following: Utilities = $60, salary =$1,500, advertising = $0, Insurance =$50, Interest =$0, Rent(for the cart)=$300, Depreciation =$0. What are Sue's variable cost? Explain. What is Sue's COGS? Explain What are her fixed costs? Explain What is Sues YOU? How much cash reserve should she keep in the bank?
Search instead for Last month, Sue, of sue's sandwiches, sold $3000 worth of product(sandwhiches and sodas) from her sidewalk cart to 300 customers. She spent $600 on the sandwich ingredients and buying the sodas wholesale. Her monthly costs are the following: Utilities = $60, salary =$1,500, advertising = $0, Insurance =$50, Interest =$0, Rent(for the cart)=$300, Depreciation =$0. What are Sue's variable cost? Explain. What is Sue's COGS? Explain What are her fixed costs? Explain What is Sue's EOU? How much cash reserve should she keep in the bank?
Last month, Sue, of sue's sandwiches, sold $3000 worth of product(sandwiches and sodas) from her sidewalk cart to 300 customers. She spent $600 on the sandwich ingredients and buying the sodas wholesale. Her monthly costs are the following: Utilities = $60, salary =$1,500, advertising = $0, Insurance =$50, Interest =$0, Rent(for the cart)=$300, Depreciation =$0. What are Sue's variable cost?
a. Sue's variable costs are the costs that vary based on the level of production or sales. In this case, the variable costs would include the cost of sandwich ingredients and the cost of buying the sodas wholesale. These costs change depending on the number of sandwiches and sodas she sells.
b. Sue's COGS (Cost of Goods Sold) is the direct cost associated with producing or acquiring the products that are sold. In this case, Sue's COGS would include the cost of sandwich ingredients and buying the sodas wholesale. This cost is directly related to the sales and can be calculated by subtracting the variable costs from the total sales.
COGS = Cost of sandwich ingredients + Cost of buying sodas wholesale
c. Other variable costs refer to the additional costs that are directly related to the level of production or sales but are not considered part of the COGS. In this scenario, there are no other mentioned variable costs besides the sandwich ingredients and sodas. Therefore, there are no other variable costs.
d. Fixed costs are the costs that do not change with the level of production or sales. In Sue's case, her fixed costs include utilities, salary, insurance, rent for the cart, and depreciation. These costs remain constant regardless of the number of sandwiches and sodas sold.
e. Sue's EOU (Earnings before Overhead and Utilities) represent the earnings or profits a business generates before considering overhead expenses (such as utilities) and other costs. To calculate Sue's EOU, we subtract her variable costs (COGS) and her fixed costs from the total sales:
EOU = Total Sales - COGS - Fixed Costs
f. The amount of cash revenue Sue should keep in the bank depends on her business's needs and financial strategy. However, generally, it is advisable for businesses to have a cash reserve for emergencies, ongoing expenses, and future investments. The specific amount can be determined by considering factors such as cash flow projections, operating expenses, growth plans, and potential risks or uncertainties. It is recommended to consult with a financial advisor or accountant to determine an appropriate cash reserve for Sue's Sandwiches.