A local college hospitality restaurant has the best meals in town. The average variable cost per meal is $10.25 and the desserts are $1.25. The restaurant has fixed operating costs of $110 500 per month. They sell the meals and desserts for three times their average variable cost per meal. The college wants to make a monthly profit of $50 000. How many meals must they sell (Round up to nearest whole meal)?

Question

Quizplus · Accepted Answer

The average variable cost per meal is $10.25, and desserts are $1.25, but the dessert cost is not needed for this calculation. The selling price is three times the average variable cost, so $10.25 * 3 = $30.75 per meal. The restaurant wants a monthly profit of $50,000 on top of covering its fixed costs of $110,500. Therefore, the total amount needed is $110,500 (fixed costs) + $50,000 (desired profit) = $160,500. To find out how many meals they need to sell, divide the total amount needed by the price per meal: $160,500 / $30.75 ≈ 5219.51. Since they can't sell a fraction of a meal, they need to round up, resulting in 5220 meals. However, none of the provided options match this calculation, suggesting a mistake in the interpretation of the options or a calculation error. Given the options, the closest correct approach based on the provided calculation would be to reassess the calculation or the interpretation of the question's requirements. The correct calculation should consider all relevant costs and the selling price accurately, but without the exact formula or correct option matching the calculation, the response is based on the initial interpretation of the provided information.

A Local College Hospitality Restaurant Has the Best Meals in Town