Bonnie and Clyde Started the BC Restaurant a Few Years

Bonnie and Clyde started the BC Restaurant a few years ago.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 one percent a month.This situation pleases both Bonnie and Clyde, but they do not understand how sales can grow by one percent 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.

Correct Answer:

Verified

The fixed costs per meal served are decr...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

View Full Answer For Free