Assume instead of one product (BBQ sandwich), Mei & Wei's Grill served three products: the BBQ sandwich, which sold for $12 and had variable costs of 40% of sales price; the beef Taco, which sold for $9 and had variable costs of 35%, and the Mac and Cheese Pulled Pork, which sold for $12 and had variable costs of 50%. Fixed costs were expected to remain at $10,000 per year (180 operational days) and income taxes were expected to be 20%. On a typical day, Mei and Wei would serve 125 customers. 25 customers would order Mac and Cheese Pulled Pork, 25 would order beef Tacos, and 75 would order BBQ sandwich. Assuming a constant sales mix, if the entrepreneurs wish to earn a target profit of $100,000 after tax, how many units of each item must be sold?

Assume instead of one product (BBQ sandwich), Mei & Wei's Grill served three products: the BBQ sandwich, which sold for $12 and had variable costs of 40% of sales price; the beef Taco, which sold for $9 and had variable costs of 35%, and the Mac and Cheese Pulled Pork, which sold for $12 and had variable costs of 50%. Fixed costs were expected to remain at $10,000 per year (180 operational days) and income taxes were expected to be 20%. On a typical day, Mei and Wei would serve 125 customers. 25 customers would order Mac and Cheese Pulled Pork, 25 would order beef Tacos, and 75 would order BBQ sandwich. Assuming a constant sales mix, if the entrepreneurs wish to earn a target profit of $100,000 after tax, how many units of each item must be sold?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

Question

Assume instead of one product (BBQ sandwich), Mei & Wei's Grill served three products: the BBQ sandwich,
which sold for $12 and had variable costs of 40% of sales price; the beef Taco, which sold for $9 and had
variable costs of 35%, and the Mac and Cheese Pulled Pork, which sold for $12 and had variable costs of
50%. Fixed costs were expected to remain at $10,000 per year (180 operational days) and income taxes
were expected to be 20%. On a typical day, Mei and Wei would serve 125 customers. 25 customers would
order Mac and Cheese Pulled Pork, 25 would order beef Tacos, and 75 would order BBQ sandwich.
Assuming a constant sales mix, if the entrepreneurs wish to earn a target profit of $100,000 after tax, how
many units of each item must be sold?

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