A sandwich shop estimates it will serve 3,000 guests in a coming accounting period. The nonfood operating costs for the period are estimated to be $13,000, and the operation seeks to achieve profits in the period of $1,850. What will be contribution margin per guest the manager will want to achieve in the period?

Question

Quizplus · Accepted Answer

The contribution margin per guest is calculated as the difference between the selling price per guest and the variable cost per guest. In this case, the selling price per guest is not given, so we cannot calculate the contribution margin per guest directly. However, we can use the information given to calculate the total contribution margin for the period, which is the difference between the total revenue and the total variable costs. The total revenue is equal to the number of guests multiplied by the selling price per guest, and the total variable costs are equal to the nonfood operating costs. Therefore, the total contribution margin is equal to:Total contribution margin = Total revenue - Total variable costsTotal contribution margin = 3,000 guests * Selling price per guest - $13,000Total contribution margin = $1,850The contribution margin per guest is then calculated as the total contribution margin divided by the number of guests:Contribution margin per guest = Total contribution margin / Number of guestsContribution margin per guest = $1,850 / 3,000 guestsContribution margin per guest = $0.6167Therefore, the manager will want to achieve a contribution margin per guest of $0.6167, which is closest to answer choice C, $0.61.

A Sandwich Shop Estimates It Will Serve 3,000 Guests in a Coming