Fernando plans to sell hot coffee, cider and tea from a sidewalk cart near Wall Street in New York City. Each month he expects to sell $20,000 of product to 4,000 customers. He spent $4,000 on buying his beverage and supplies in bulk for the first month. The rental deposit on the cart was $4,000 and Fernando spent $500 to customize it. He bought a laptop, printer and software for $1,000 and paid a total of $1,000 for licenses. He has $500 in petty case for start up. His monthly costs are: Utilities = $500, Salary = $4,000, Advertising = $0, Insurance = $500, Interest = $0, Rent (cart) = $2,000, Depreciation = $0. Calculate Fernando's start-up costs without a reserve.
A) $18,000
B) $14,000
C) $12,500
D) $11,000

Question

Quizplus · Accepted Answer

Start-up costs include the initial expenses before operations begin and any additional expenses to get started. For Fernando, these are: $4,000 (beverage and supplies) + $4,000 (rental deposit) + $500 (customization) + $1,000 (laptop, printer, software) + $1,000 (licenses) + $500 (petty cash) = $11,000.

Fernando Plans to Sell Hot Coffee, Cider and Tea from a Sidewalk