Sam\'s Sushi serves only a fixed-price lunch. The price of $9 and the variable c

Question

Sam's Sushi serves only a fixed-price lunch. The price of $9 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 Monthly Volume Range (Number of Meals) Total 1 Lane 2 Lanes 3 Lanes 0-5,000 5,001-8,000 8,001-10,000 Fixed Costs S 21,000 30,000 37,200 Required a. Calculate the break-even point(s) Break-even points 1 lane 2 lanes 3 lanes meals meals meals b-1. Calculate the profit (or loss) for each alternative, assuming Sam can sell all the meals he can serve. (Loss amounts should be indicated with a minus sign.) Profit (Loss 1 lane 2 lanes 3 lanes $(1,000) b-2. Should Sam operate at one, two, or three lanes? O 1 lane 2 lanes 3 lanes

Explanation / Answer

Selling price Per unit 9

Less- Variable cost Per Unit    5

Contribution Per unit   4

A Break even point= Fixed cost/Contribution per unit

1 lane= 21000/4=5250

2 lane= 30000/4=7500

3 lane= 37200/4=9300

b-1 Profit/Loss = Sales- variable cost- fixed cost

1 lane = 5000*9-5000*5-21000

45000-25000-21000

Loss =(1000)

2 Lane Profit/Loss= 8000*9-8000*5-30000

72000-40000-30000

Profit = 2000

3 Lane Profit/Loss= 10000*9-10000*5-37200

=90000-50000-37200

Profit =2800

B-2 3 Lanes

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