Question

Jose's Mexican restaurant has a margin per unit of $2.00 for a typical dinner offering on his menu, total fixed expenses of $10,000, and average variable costs of $3.00 per dinner. How many dinners must Jose sell to break even?

a. 2,000
b. 3,334
c. 5,000
d. 20,000
e. 30,000

Answer 1

Answer:

c. 5,000

Explanation:

Break Even Point = $\frac{Fixed \: Cost}{Contribution\: Per\: Unit}$

Here Contribution = margin per unit as margin is sales price - cost,

Since Margin is per unit it is obvious that while calculating margin per unit only variable cost is considered, and no fixed cost will be considered.

Therefore Contribution = $2.00 per unit

Fixed Cost given = $10,000

Break Even Point in units = $\frac{10,000}{2} = 5,000$

Correct option is

c. 5,000

Answer 2

Answer:

5000

Explanation:

I don't have an idea.