Chapter 21, Problem 21.1DC

To determine

Concept Introduction:

Break-even point is a point at which the total sales equal the total costs. In the same manner, break-even sales mean that the volume of sales, equates to the cost of the company. We can say that the sale done just to recover the costs incurred by the company is the break-even sales. Moreover, the contribution margin is the excess of revenue over the variable cost of the product.

1) The breakeven number of meals and sales revenue for the restaurant.

2) The number of meals and amount of sales revenue needed to earn an operating income of $ 75,600 for the year.

3) The number of meals the Homs serves each night to earn their target profit of $ 75,600.

4) The factors to be considered before they make their decision of opening a restaurant.