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Each month, the owner of a small restaurant that sells take-out fried chicken and biscuits pays $2,500 in rent, $500 in utilities, $750 interest on a loan, insurance premium of $200, and $250 on advertising on local buses. A bucket of take-out chicken is priced at $9.50. Unit variable costs for the bucket of chicken are $5.50. How many small buckets of chicken does the restaurant need to sell to break even each month?
Suggested Answer: C
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21 comments · newest first
DE
Dean
1 month ago
This is confusing! I hope I get it right on the exam.
DA
Dalene
1 month ago
But A is more accurate based on the calculations!
LA
Lavonne
1 month ago
I think it balances the costs better.
DE
Dean
2 months ago
Why B?
LA
Lavonne
2 months ago
I feel like I might choose B) 764 buckets instead.
DA
Dalene
2 months ago
No, that's for C. We need to find the right calculation for A.
DE
Dean
2 months ago
So, $4,200 divided by $4 equals 1,050 buckets?
DA
Dalene
2 months ago
Fixed costs are $4,200. Selling price minus variable cost is $4.
LA
Lavonne
2 months ago
How did you get that?
DA
Dalene
3 months ago
I believe the answer is A) 442 buckets. The math adds up!
DE
Dean
3 months ago
Yeah, I agree! We need to find the break-even point.
LA
Lavonne
3 months ago
This question is tricky! I think it's about calculating fixed and variable costs.
JO
Johana
3 months ago
No way, it’s definitely 442 buckets!
BE
Belen
3 months ago
I think it’s actually 764 buckets, though.
LE
Levi
4 months ago
Wait, are you sure it’s not more than that?
PE
Pearlie
5 months ago
That’s 442 buckets, right? Sounds about right!
DE
Devora
5 months ago
Gotta cover $4,200 in fixed costs!
HA
Harrison
6 months ago
I’m pretty confident that the fixed costs are $4,200, but I’m not sure how to calculate the break-even quantity from there.
VI
Virgina
6 months ago
I feel like I might have mixed up the variable costs and fixed costs. Is the contribution margin just the selling price minus the variable cost?
DO
Donte
6 months ago
I remember a similar question where we had to find the break-even point. I think we need to use the formula: fixed costs divided by the contribution margin.
JA
Jamika
6 months ago
I think we need to calculate the total fixed costs first, but I'm not sure if I included all the expenses correctly.