The owner of a take-out fried chicken and biscuits restaurant pays each month $2,500 in rent, $500 in utilities, $750 loan interest, $200 insurance premium, and $250 on local bus advertising. A bucket of chicken is priced at $9.50. Variable costs for the bucket are $5.50. How many buckets of chicken does the restaurant need to sell to break-even each month?

Question

Quizplus · Accepted Answer

To find the break-even point, we need to calculate the total fixed costs and variable costs per unit. 
Total fixed costs = $2,500 + $500 + $750 + $200 + $250 = $4,200 
Contribution margin per unit = price per unit - variable cost per unit = $9.50 - $5.50 = $4 
Break-even point in units = Total fixed costs / contribution margin per unit = $4,200 / $4 = 1,050 
Therefore, the restaurant needs to sell 1,050 buckets of chicken to break-even each month.

The Owner of a Take-Out Fried Chicken and Biscuits Restaurant