Question

It costs a man $85 to buy the things that he needs to make hot dogs. The city allows him to sell his hot dog somewhere near the city hall. However, city hall charges him $1.50 for each hot dog sold. Calculate the break-even point if the price he charges for 1 hot dog is $2.50

Answer 1

85 hot dogs and sale of $212.50

Step-by-step explanation:

Price of 1 hot dog = $2.50

City hall charges = Variable cost of 1 hot dog = $1.50

Contribution margin = $2.50 - $1.50 = $1.00

Things to buy = Total Fixed Cost = $85

Break-even Point (hot dogs) = $85 / $1 = 85 hot dogs

Break-even Point (Sales) = 85 x 2.50 = $212.50

So, the break-even point is 85 hot dogs and sales of $212.50.