Question

10. Chef Company makes and sells pre-packed lunches. The variable cost of each lunch is $5. The lunches are sold for $10 each. Fixed operating expenses amount to $10,000. Using the space below prepare a break-even graph. Indicate the following on the graph: (a) fixed cost, (b) total cost, (c) total revenue, (d) loss, (e) breakeven point, and () profit area.

Answer 1

x Ss Volume Volume (Units) (1)+(2) Volume x $10 Total revenue So Variable Cost Fixed Cost Total Cost From the graph, $0 $10,000 $2,500 $10,000 $5,000 $10,000 $7,500 $10,000 $10,000 $10,000 $12,500 $10,000 $15,000 $10,000 $10,000 $12,500 $15,000 $17,500 $20,000 $22,500 $25,000 0 $5,000 Beakeven Sales, dollars $10,000 Breakeven Sales, units $15,000 $20,000 Profit area starts after the breakeven sales. $25,000 Here, firm earns confirmed profit for each unit sold. $30,000 $20,000 2,000 500 1,000 1,500 2,000 2,500 3,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 50 Profit Area Breakeven Point Total Cost -Variable Cost Fxed Cost Total revenue 500 1,000 1,500 2,000 2,500 3,000 3,500