Question

please show work!
you just won your state lottery and will be receiving a check for $1 million. You have always wanted to own your own business and have noticed the increase in the number of food trucks in your local area. A new food truck with a kitchen and related equipment costs about $100,000. Other fixed costs include salaries, gas for the truck, and license fees and are estimated to be about $50,000 per year. You decide to offer traditional Mediterranean cuisine. Variable costs include food and beverages estimated at $6 per platter (meat, rice, vegetable, and pita bread). Meals will be priced at $10. Calculate the break-even for your food truck business. After reviewing your break-even, what changes would you consider?
PLEASE SHOW WORK

Answer 1

Answer:

Total Fixed cost = $ 100000 + $ 50000 = $ 150000

Variable cost per unit ( V ) = $ 6

Selling price per unit ( S ) = $ 10

Break-even Quantity = FC / ( S - V)

= 150000 / ( 10 - 6 )

= 150000 / 4 = 37500 units ( platters)

At this quantity TR = TC ( no profit & no loss)

TR = 37500 * $ 10 = $ 375000

TC = Total fixed cost + TVC

= $ 150000 + ( 37500 * $ 6) = $ 375000

If You want to earn profit you have to sell more than this break-even quantity.