Final answer:
Costco pays its employees an average of $20 per hour and offers health insurance to nearly 90% of them, unlike the mock example of a copy center that pays $12 per hour. A business with revenues exceeding variable costs should continue operations, whereas it should consider shutting down if costs outweigh revenues. Calculating service costs involves multiplying the hourly rate by hours of service and adding any one-time fees.
Step-by-step explanation:
Businesses like Costco, Chipotle, and Panera, are known to provide better compensation and benefits compared to the traditional fast-food industry model often referred to as McDonaldization. To illustrate, we can consider that Costco pays its employees an average wage of $20 per hour, which translates to a little over $40,000 per year. This is in contrast with a hypothetical copy center that pays $12 per hour. Additionally, Costco stands out in the retail sector with nearly 90% of their employees receiving health insurance from the company.
When analyzing business decisions, companies need to assess their financials carefully. If a center is earning revenues of $20,000 with variable costs of $15,000, it implies that the business is operating at a profit and should continue operations. In contrast, if a business's revenues drop to $10,000 while variable costs remain at $15,000, the business is operating at a loss and should consider shutting down.
In terms of calculating service costs, as with Aaron's Word Processing Service, the total cost to a customer is found by taking the rate for services and adding on any one-time charges. For instance, at a rate of $32 per hour plus a $31.50 one-time charge, the equation expressing the total cost as a function of hours would be: Total Cost = $32 × Number of Hours + $31.50.