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Author Question: Dolph and Evan started the DE Restaurant in 2015. They rented a building, bought equipment, and ... (Read 94 times)

lbcchick

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Dolph and Evan started the DE Restaurant in 2015. They rented a building, bought equipment, and hired two employees to work full time at a fixed monthly salary. Utilities and other operating charges remain fairly constant during each month.

During the past two years, the business has grown with average sales increasing 1% a month. This situation pleases both Dolph and Evan, but they do not understand how sales can grow by 1% a month while profits are increasing at an even faster pace. They are afraid that one day they will wake up to increasing sales but decreasing profits.

Required:
Explain why the profits have increased at a faster rate than sales. Use the terms variable costs and fixed costs in your response.


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Marked as best answer by lbcchick on Mar 6, 2021

lauravaras

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lbcchick

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Reply 2 on: Mar 6, 2021
Gracias!


Dinolord

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Reply 3 on: Yesterday
YES! Correct, THANKS for helping me on my review

 

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