Question

Sub Place, a small sandwich store, is located on a busy corner near many other businesses. The shop's busiest time is during the mid-day period. Rent for the location is 5900 per month, and wages amount to $2100 per month Variable costs consist of supplies and sandwich Ingredients that cost $2.36 per sub sandwich The subs are to be sold at a price of $5.89 bach. Answer each of the following independent questions. (a) How many sandwiches must the shop sell to break even? (b) If the shop increases variable costs by 50.16 per sandwich, how many sandwiches must it sell to break even? (c) If the rent increases by 14%, what would the profit be if the shop sold 1564 units ? (d) If the sandwich price was reduced by 50 16, how many sandwiches must the shop sell to make S1050 profie? (a) The shop must sellsandwiches to break even (Round up to the nearest whole number.) (b) If variable costs increase by $0.16 per sandwich the number of sandwiches required to break even is (Round up to the nearest whole number) (c) If the rent increased by 14% and the shop sold 1564 units the shop would make any profit (Round to the nearest cent as needed (d) If the selling price of 55.89 is reduced by 50.16 and a profit of S1050 is required then the number of sandwiches that needs to be sold is (Round up to the nearest whole number)

Answer 1

Solution Rent = $900/month wages = $2,00/month Variable cost =2. 36/sub sandwich 80, Total Cost =BE C (H) = 90072100 +12036x«) C(a) where a = no. of Sunwiches. Selling price of 1 Sandwich = $5.99 lo Revenue R(2) = 5.89a = 3000 +2.362 a) for boreak even point C(x) = R(1) 3000+2.36% = 5,8936 3000 = 3.5 32 3000 = x 3.53 849.85 = 2 So, approximately 850 sandwich must be sell b) Variable cost increase bij $0.16/ Sandwich so, New, C(a)=3000+ 2.522 for break-even point. C(x) = R(W) 3000+ 21527 = 5.899 3000 = 3.37 a 890.2 5x

for brack, even point 890 sandwiches must be sell. c) New sent 900 + 14% of 900 Newsent =900t 14 x 900 900 +126 New dent=1026 then ((a)=1096+2100+ 2.362 Cen) = 3 3196 + 2-360 & R(2) 25.892 P(a) = R(2)-C (2) Plan = 5.892 -2.362-3196 P(M) 3153a - 3196 2= 1564 units PC1564) - 5520.92-3196 p(1564) -$2324.92 So, brofit is of $2325 d2 New selling Price 5.89-0.16 = $5.73 * & P(x) $1050 Now, R(a)= 5.732 Plas= 5.73 2.362 - 3000 loso 3.374-3000 4050 = 3.372 4050 x 3:37 1201.78=2 So, no of Sandwiches is 1202 .