Huntington Products, Inc. |
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The cafeteria at Huntington Products, Inc. sells meals to the company's employees. Its goal is to break even. Information for the past three months of operations is in Exhibit 1. In March, the cafeteria expects to serve 10,000 meals.
Assignment
1. Develop a cost equation for the cafeteria that can be used to predict total monthly costs.
2. During February, how much would the price per meal need to be for the cafeteria to break even?
3. If the cafeteria price is $10.10 per meal, how many meals must it sell to breakeven.
HUNTINGTON PRODUCTS Exhibit 1. Meal-Related Data
December January February
Number of meals served 3,000 5,000 8,000
Cost of food sold $18,000 $30,000 $48,000 Staff salaries and fringe benefits 14,500 16,500 19,500 Rent and depreciation 4,000 4,000 4,000 Utilities and other 2,100 3,300 5,100 Total $38,600 $53,800 $76,600
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