Last year\'s manager had advised you to be sure to add 10% of variable cost as a

Question

Last year's manager had advised you to be sure to add 10% of variable cost as a waste allowance for all categories.You estimate the labor cost to be $250.00 (5 booths with 2 people each). Even if you don't sell anything, labor cost will still be $250. Booth rental, contractual cost, is $50 per booth, is also fixed cost.

a) What is the break-even revenue per evening performance?

b) How much wine would you expect to sell each evening at the break-even point? Please mark you answers as clearly as possible and show your work (calculations)

Item Selling Price Variable Cost % of revenue Soft drink 1.00 0.65 25 Wine 1.75 0.95 25 Coffee 1.00 0.30 30 Candy 1.00 0.30 20

Explanation / Answer

labor + booths= total evening costs. Both costs must be covered to break even.
$250 + ($50* 5 booths) = $500

The break-even revenue per evening performance = $500

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