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Home Q & A Board Other Fields Homework Help Business Accounting
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vsisto vsisto
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5 years ago
Dolph and Evan started the DE Restaurant in 20X3. 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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jingjing.wang@sjingjing.wang@s
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5 years ago
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vsisto Author
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#2
5 years ago
Thank you for helping me with my quiz
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