Question

A restaurant has fixed costs of $53,400 for the month of March 0006. The average check is $12.95, with an average variable cost of $7.38. What is breakeven units of sales revenue for the month of March

Answer 1

Answer:

9587 orders are needed to achieve breakeven sales revenue for March' 06  

Explanation:

Break Even Point is where firm earns Total Revenue (TR)  equal to its total cost (TC)

• Total Revenue = Average Revenue or Price x Quantity ;
• Total Cost = Total Fixed Cost + Total Variable Cost

Let quantity i.e unit of sales revenue be = x

Above 2 formulas & ; Total Variable Cost = Average Variable Cost x Quantity implies :-

12.95x = 7.38x  + 53400

12.95x - 7.38 x = 53400

5.57 x = 53400

x = 53400 / 5.57

x = 9587