Question

Sam's Sushi serves only a fixed-price lunch. The price of $10 and the variable cost of $5 per meal remain constant regardless of volume. Sam can increase lunch volume by opening and staffing additional check-out lanes. Sam has three choices, as follows. 1 Lane 2 Lanes 3 Lanes Monthly Volume Range (Number of Meals) 0–5,000 5,001–8,000 8,001-10,000 Total Fixed Costs $ 28,000 30,000 38,400 Required: a. Calculate the break-even point(s). b-1. Calculate the profit (or loss) for each alternative, assuming Sam can sell all the meals he can serve. b-2. Should Sam operate at one, two, or three lanes? Complete this question by entering your answers in the tabs below. Req A Req B1 Req B2 Calculate the break-even point(s). Break-Even Points 1 lane meals 2 lanes meals 3 lanes meals

Answer 1

a Break even posat Fixed cost Contribution _per meal where, Contribution per meal sale price variable cost $10 - $52 $5 permeal. I lane -> Breakeveo point 5 #28,000/85'5,600 meals. (anowa). 2 tanesi - Breakeven point = $30,000/15 = 6,000 moals (Anwerd 3 lanes Breakeven point - $38,400 /ss 7, 680 meals (Answer) b. 1) profit/Clost) Contribution Fixed cost Contribution per meal х No. of meals Loss Profit/ Closs I Lane (5,000 x $5] - $28,000 2 Lanes — [8,000x $5) $30,000 3 Lanes → (10,000x35) $ 38,400 $ (3,000) $10,000 $ 11,600 -profit profit . 6:2) Since profit is maximum at_3 lanes, Sam should operate at 3 lanes. Please feel free to ask any queries_and_do_give a thumbsup if the solution was satisfactory. Thank you.