Question

A restaurant averages ales of $120,000 when serving 20,000 guests. The restaurant's variable costs when 20,000 is $90,000. The contribution margin per guest is $1.50. Fixed monthly costs are $50,000. What is the restaurant's monthly breakeven point in sales dollars?

Answer 1

The restaurant's monthly break-even point in sales dollars is $33,333.33.

Step-by-step explanation:

To find the break-even point in sales dollars, we need to calculate the fixed costs and the contribution margin per guest. The fixed costs are given as $50,000. The contribution margin per guest is $1.50. The break-even point can be calculated using the formula:

Break-even point = Fixed Costs ÷ Contribution Margin per guest

Substituting the given values, we get:

Break-even point = $50,000 ÷ $1.50 = $33,333.33

Therefore, the restaurant's monthly break-even point in sales dollars is $33,333.33.

Answer 2

Answer: Restaurant's monthly breakeven point in sales is $31333.

Step-by-step explanation:

Since we have given that

Number of guests = 20,000

Average sales = $120,000

Contribution margin per guest = $1.50

Let the number of sales be 'x'.

Cost per sales would be

`(120000)/(20000)\\\\=\$6`

Margin contributed by 2000 guests would be

`1.50* 20000\\\\=\$3000`

So, Revenue function would be

`6x+3000`

Fixed monthly cost = $ 50,000

Variable cost for 20000 guests = $90000

So, Variable cost per sale would be

`(90000)/(20000)\\\\=\$4.5`

So, Cost function would be

`4.5x+50000`

Breakeven point would be

Cost function = Revenue function

`6x+3000=4.5x+50000\\\\6x-4.5x=50000-3000\\\\1.5x=47000\\\\x=(47000)/(1.5)\\\\x=\$31333.33\\\\x=\$31333`

Hence, Restaurant's monthly breakeven point in sales is $31333.