Question

Jose's Mexican restaurant has a margin per unit of $2.00 for a typical dinner offering on his menu, total fixed expenses of $10,000, and average variable costs of $3.00 per dinner. How many dinners must Jose sell to break even?

a. 2,000
b. 3,334
c. 5,000
d. 20,000
e. 30,000

Answer 1

5000

Step-by-step explanation:

I don't have an idea.

Answer 2

c. 5,000

Step-by-step explanation:

Break Even Point =
`(Fixed \: Cost)/(Contribution\: Per\: Unit)`

Here Contribution = margin per unit as margin is sales price - cost,

Since Margin is per unit it is obvious that while calculating margin per unit only variable cost is considered, and no fixed cost will be considered.

Therefore Contribution = $2.00 per unit

Fixed Cost given = $10,000

Break Even Point in units =
`(10,000)/(2) = 5,000`

Correct option is

c. 5,000