Question

1. Bob's Burgers recently renovated its stores. They bought three new fryers which costed $1500 ench, two new grills that costed $3000 each, new tilling that costed $12,000 to install, and new lighting fixtures costing $500. They also spent $100,000 in local advertising to promote the store. They sell meals at an average cost of $8.50 while unit costs per meal are about $1.45. (Remember to add up your costs carefully a Calculate the number of meals they need to sell to breakeven. Please show your calculations.

Answer 1

Answer a

Cost of fryers and grills need not be considered as these are assets and techincally not a cost centre.

The total fixed cost incurred =

$12000 + $500+ $100000 = $112500

Revenue less variable cost per unit

= (8.50-1.45) =$7.05

No of burgers required to be sold to break even = 112500/7.05 = 15978 burgers

Answer 36

Revenue after deducting variable cost (for 50000) burgers = $7.05 x 50000 = 352500

Profit ( i.r after deducting fixed cost )

= 352500 - 112500

= 240000

Answer 37

Total revenue for 50000 burgers = $8.50 x 50000 = 425000

Variable cost till 30000 burgers = $1.45 x 30000 = $43500

Variable cost of 30000-50000 burgers

= $2.10 x (50000 -30000) = $42000

Total fixed cost = $ 112500

Profit =425000 -43500- 42500-112500= $226500

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