Question

Sams Sushi serves only a fixed-price lunch. The price of $8 and the variable cost of $4 per meal remain constant regardless

Calculate Break Even Point for:

Lane 1:

Lane 2:

Lane 3:

Calculate profit loss for:

Lane 1:

Lane 2:

Lane 3:

Should Sam operate at one, two or three lanes?

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Answer #1
Required a :
Contribution margin per unit = Selling price per unit - Variable cost per unit = 8 - 4 4

Break even point

[ Total fixed costs / Contribution margin per unit ]

Lane 1 : [ 21000 / 4 ] 5250
Lane 2 : [ 31000 / 4 ] 7750
Lane 3 : [ 36000 / 4 ] 9000
Required b-1 :

Profit (Loss)

[ ( Maximum units - Break even point ) * Contribution margin per unit ]

Lane 1 : [ ( 5000 - 5250 ) * 4 ] -1000
Lane 2 : [ ( 8000 - 7750 ) * 4 ] 1000
Lane 3 : [ ( 10000 - 9000 ) * 4 ] 4000
Calculate b-2 :
Should Sam operate at one, two or three lanes?
Answer : 3 Lanes
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