Two competing food vendors were located side by side at a state fair. Both occupied buildings of the same size, paid the same rent, Kshs 1,250, and charged similar prices for their foods. Vendor a employed three times as many employees as B and had twice as much income as B even though B had more than half the sales of A. Other data are as follows: Vendor AVendor BSalesKshs 8,000Kshs 4,500Cost of goods sold50% of Sales50% of SalesWagesKshs 2,250Kshs 750 You are required to answer the following:Explain why vendor A is twice as profitable as VendorBy how much would vendor B’s sale have to increase in order to justify the doubling of the number of employees at the same rate of pay if B’s desired operating income is Kshs 350?

vendor Avendor Bsales80004500less: cost of goods sold40002250Contribution40002250…

Answered: Two competing food vendors were located…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Two competing food vendors were located side by side at a state fair. Both occupied buildings of the same size, paid the same rent, Kshs 1,250, and charged similar prices for their foods. Vendor a employed three times as many employees as B and had twice as much income as B even though B had more than half the sales of A. Other data are as follows:

	Vendor A	Vendor B
Sales	Kshs 8,000	Kshs 4,500
Cost of goods sold	50% of Sales	50% of Sales
Wages	Kshs 2,250	Kshs 750

You are required to answer the following:

Explain why vendor A is twice as profitable as Vendor
By how much would vendor B’s sale have to increase in order to justify the doubling of the number of employees at the same rate of pay if B’s desired operating income is Kshs 350?

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