As a prospective owner of a club known as theRed Rose, you are interested in determining the volume of salesdollars necessary for the coming year to reach the break-evenpoint. You have decided to break down the sales for the club intofour categories, the first category being beer. Your estimate of thebeer sales is that 30,000 drinks will be served. The selling price foreach unit will average $1.50; the cost is $.75. The second majorcategory is meals, which you expect to be 10,000 units with an average price of $10.00 and a cost of $5.00. The third major cat-egory is desserts and wine, of which you also expect to sell 10,000 units, but with an average price of $2.50 per unit sold and a costof $1.00 per unit. The final category is lunches and inexpensivesandwiches, which you expect to total 20,000 units at an averageprice of $6.25 with a food cost of $3.25. Your fixed cost (i.e., rent,utilities, and so on) is $1,800 per month plus $2,000 per month forentertainment.a) What is your break-even point in dollars per month?b) What is the expected number of meals each day if you are open30 days a month?
As a prospective owner of a club known as the
Red Rose, you are interested in determining the volume of sales
dollars necessary for the coming year to reach the break-even
point. You have decided to break down the sales for the club into
four categories, the first category being beer. Your estimate of the
beer sales is that 30,000 drinks will be served. The selling price for
each unit will average $1.50; the cost is $.75. The second major
category is meals, which you expect to be 10,000 units with an
average price of $10.00 and a cost of $5.00. The third major cat-
egory is desserts and wine, of which you also expect to sell 10,000
units, but with an average price of $2.50 per unit sold and a cost
of $1.00 per unit. The final category is lunches and inexpensive
sandwiches, which you expect to total 20,000 units at an average
price of $6.25 with a food cost of $3.25. Your fixed cost (i.e., rent,
utilities, and so on) is $1,800 per month plus $2,000 per month for
entertainment.
a) What is your break-even point in dollars per month?
b) What is the expected number of meals each day if you are open
30 days a month?
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