The owner of a small restaurant that sells takeout fried chicken and biscuits each month pays $2,500 in rent,$500 in utilities,$750 interest on his loan,insurance premium of $200,and $250 on advertising on local buses.A bucket of chicken is priced at $9.50.Unit variable costs for the bucket of chicken are
)50.How many buckets of chicken does the restaurant need to sell to break even each month?
A) 442 buckets
B) 764 buckets
C) 1,050 buckets
D) 3,150 buckets
E) 4,200 buckets

Question

Quizplus · Accepted Answer

To calculate the break-even point, we need to find the total fixed costs (rent+utilities+interest+insurance+advertising) and divide it by the contribution margin per unit, where the contribution margin is the selling price minus the unit variable cost.

Total fixed costs = $2,500 + $500 + $750 + $200 + $250 = $4,200

Contribution margin per bucket of chicken = $9.50 - $5.50 = $4

Break-even point in units = Total fixed costs / Contribution margin per unit = $4,200 / $4 = 1,050 buckets of chicken

Therefore, the restaurant needs to sell 1,050 buckets of chicken each month to break even.

The Owner of a Small Restaurant That Sells Takeout Fried