The owner of a small restaurant that sells take-out fried chicken and biscuits pays each month $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 take-out chicken is priced at $9.50.Unit variable costs for the bucket of chicken are $5.50.How many small 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 break even, the total revenue should cover all the fixed costs and variable costs. 
The total fixed cost is: 
$2,500 + $500 + $750 + $200 + $250 = $4,200

The contribution margin per unit (the amount that contributes toward covering fixed costs) is: 
$9.50 - $5.50 = $4

Therefore, the number of units needed to cover the fixed costs is: 
$4,200 ÷ $4 = 1,050 units or buckets of chicken.

Thus, the correct answer is C) 1,050 buckets.

The Owner of a Small Restaurant That Sells Take-Out Fried