Question

restaurant is considering adding fresh brook trout to its menu. Customers would have the choice of catching their own trout from a simulated mountain stream or simply asking the waiter to net the trout for them. Operating the stream would require ​$8 comma 400 in fixed costs per year. Variable costs are estimated to be ​$6.50 per trout. The firm wants to break even if 700 trout dinners are sold per year. What should be the price of the new​ item? ​$ nothing. ​(Enter your response rounded to the nearest penny​.)

Answer 1

Price= $18.5

Step-by-step explanation:

Giving the following information:

Operating the stream would require ​$8,400 in fixed costs per year. Variable costs are estimated to be ​$6.50 per trout. The firm wants to break even if 700 trout dinners are sold per year.

Break-even point= fixed costs/ contribution margin

700= 8,400/(P-6.5)

700*(P-6.5)=8,400

700P=12,950

P=18.5