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, they are as follows:
Category Estimated Sales Cost per unit Sales price per unit
Beer 30,000 $0.75 $1.50
Meals 10,000 $5.00 $10.00
Dessert/Wine 10,000 $1.00 $2.50
Lunches/Sandwiches 20,000 $3.25 $6.25
Your fixed cost is $1800 per month plus $2000 per month for entertainment.
a) What is your break even point?
b) What is the expected number of meals eaach day if you are open 30 days a month?