As a prospective owner of a club known as the Red Rose, you are interested in determining the volume of sales dollars necessary for the coming year to reach the break-even point. You have decided to break down the sales for the club into four categories, the first category being beer. Your estimate of the beer sales is that 32,000 drinks will be served. The selling price for each unit will average $1.75; the cost is $0.75. The second major category is meals, which you expect to be 10,000 units with an average price of $10.00 and a cost of $5.50. The third major category is desserts and wine, of which you also expect to sell 10,000 units, but with an average price of $2.25 per unit sold and a cost of $1.25 per unit. The final category is lunches and inexpensive sandwiches, which you expect to total 22,500 units at an average price of $6.25 with a food cost of $3.50. Your fixed cost (i.e., rent, utilities, and so on) is $1,800 per month plus $2,400 per month for entertainment. a) For Red Rose, the monthly break-even point in dollars = $ per month (round your response to two decimal places).
As a prospective owner of a club known as the Red Rose, you are interested in determining the volume of sales dollars necessary for the coming year to reach the break-even point. You have decided to break down the sales for the club into four categories, the first category being beer. Your estimate of the beer sales is that 32,000 drinks will be served. The selling price for each unit will average $1.75; the cost is $0.75. The second major category is meals, which you expect to be 10,000 units with an average price of $10.00 and a cost of $5.50. The third major category is desserts and wine, of which you also expect to sell 10,000 units, but with an average price of $2.25 per unit sold and a cost of $1.25 per unit. The final category is lunches and inexpensive sandwiches, which you expect to total 22,500 units at an average price of $6.25 with a food cost of $3.50. Your fixed cost (i.e., rent, utilities, and so on) is $1,800 per month plus $2,400 per month for entertainment. a) For Red Rose, the monthly break-even point in dollars = $ per month (round your response to two decimal places).
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter16: Cost-volume-profit Analysis
Section: Chapter Questions
Problem 35P
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As a prospective owner of a club known as the Red Rose, you are interested in determining the volume of sales dollars necessary for the coming year to reach the break-even point. You have decided to break down the sales for the club into four categories, the first category being beer. Your estimate of the beer sales is that
32,000
drinks will be served. The selling price for each unit will average
$1.75;
the cost is
$0.75.
The second major category is meals, which you expect to be
10,000
units with an average price of
$10.00
and a cost of
$5.50.
The third major category is desserts and wine, of which you also expect to sell
10,000
units, but with an average price of
$2.25
per unit sold and a cost of
$1.25
per unit. The final category is lunches and inexpensive sandwiches, which you expect to total
22,500
units at an average price of
$6.25
with a food cost of
$3.50.
Your fixed cost (i.e., rent, utilities, and so on) is
$1,800
per month plus
$2,400
per month for entertainment.a) For Red Rose, the monthly break-even point in dollars =
$
per month (round your response to two decimal places).Expert Solution
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