Final answer:
The question involves creating financial scenarios for a business and analyzing revenues and costs to determine profit or loss. The best-case scenario yields a total revenue of $455,000, while the worst-case scenario results in $125,000 in revenue. Cost considerations are crucial in determining if the business should continue operating profitably or curtail losses.
Step-by-step explanation:
The question is asking to create best and worst-case scenarios for a business with specified revenues, which is a clear application of business financial analysis, focusing on revenue scenarios. In the best-case scenario, the total revenue from retail sales is $115,000, and from golf lessons and fees is $340,000, resulting in a total revenue of $455,000. On the other hand, the worst-case scenario involves much lower revenues with retail sales only bringing in $35,000 and golf lessons and fees contributing $90,000, totaling $125,000 in revenue.
These scenarios can be better evaluated by also considering the costs associated with them. For instance, refer to the example provided where a firm's total costs exceeded its total revenues, leading to losses. In the context of a Yoga Center, if the revenues do not sufficiently cover the fixed costs such as rent, and variable costs like wages for yoga teachers, the firm will experience losses. It's important for the business to not only generate sufficient revenue to cover costs but also to make a profit.
If we follow the logic from the example where the Yoga Center earns revenues of $20,000 and has variable costs of $15,000, the firm should continue in business as it's incurring a profit. Similarly, the retail and golf business should aim for their revenues to exceed their costs in the best-case scenario to ensure they make a profit and should try to minimize losses in the worst-case scenario.