Q:
Evaluate debit and credit card fees
The local Japanese-style steakhouse expects sales to be $500,00 in January. The average restaurant bill is $50. Only 25 percent of restaurant bills are paid in cash, while 70 percent are paid with credit cards and 5 percent are paid with debit cards. The transaction fees charges by the debit and credit card issuers are as given:
Credit cards: $0.50 per transaction + 2% of the amount charged
Debit cards: $0.22 per transaction + 0.05% of the amount charged
Requirements
a. How much of the total sales revenue is required to be paid with cash?
b. How many customers transaction does the company imagine in January?
c. How much of the total sales revenue is predictable to be paid with credit cards?
d. How many customer transactions may be paid for by customers using credit cards?
e. When budgeting for January's operating expenses, how much could the restaurant expect to incur in credit card transaction fees?
f. How much of the total sales revenue is predictable to be paid with debit cards?
g. How many customer transactions can be paid for by customers using debit cards?
h. When budgeting for January's operating expenses, how much could the restaurant expect to incur in debit card transaction fees?
i. How much money may be deposited in the restaurant's bank account in the month of January related to debit and credit card sales? Suppose the credit and debit card issuers deposit the funds on the similar day the transactions occur at the restaurant.