The owner of a convenience store is considering adding a take-away sandwich section to her offerings.The new activity will occupy 25% of the space and account for 30% of total revenues.Property insurance on the building is $9,000 per year and will not change because of the new activity.How much of the insurance premium should be allocated to the new product line?
A)$2,700
B)$2,475
C)$2,250
D)$0.00

Question

Quizplus · Accepted Answer

The insurance premium is a fixed cost that does not change with the addition of the new product line, so no portion of it should be allocated to the new activity.

The Owner of a Convenience Store Is Considering Adding a Take-Away