A sandwich store rents space for $ 948 per month and wages amount to 82219 per m

Question

A sandwich store rents space for $ 948 per month and wages amount to 82219 per month. Variable costs consist of supplies and sandwich ingredients that cost 83.61 per sandwich. The sandwiches are sold at a price of 85.73 each a If variable costs increase by 80.25 per sandwich, and all other variable remain the same, how many sandwiches must they sell to break even? b If the sandwich price was reduced by 80.25, and all other variables remain the same, how many sandwiches must they sell to make $ 1043 profit?

Explanation / Answer

(a) If variable cost increases by 0.25$ then new variable cost is 3.61$+0.25$ = 3.86$

Therefore, to get the break even we can write:

3167 + 3.86 x = 5.73 x

x = 1693.58

Therefore, they must sell 1694 sandwiches for break even.

(b) If variable cost reduces by 0.25$ then new variable cost is 3.61$-0.25$ = 3.36$

Therefore, to get the profit of 1043$ we can write:

3167 + 3.36 x + 1043 = 5.73 x

2.37x = 4210

x = 1776.37

Therefore, they must sell 1777 sandwiches to earn profit of 1043$.

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