Question

A restaurant has an average check of $15, with an average variable cost of $6. Fixed costs are $150000. What is breakeven sale revenue?

Answer 1

Break-even point (dollars)= $250,000

Step-by-step explanation:

Giving the following information:

Selling price= $15

Unitary variable cost= $6

Fixed cost= $150,000

To calculate the break-even point in sales dollars, we need to use the following formula:

Break-even point (dollars)= fixed costs/ contribution margin ratio

Contribution margin ratio= unitary CM / Selling price

Contribution margin ratio= (15 - 6) / 15

Contribution margin ratio= 0.6

Break-even point (dollars)= 150,000 / 0.6

Break-even point (dollars)= $250,000