Break-Even. A friend of yours has approached you about starting a hot dog stand at the courthouse. She has collected the following information and would like you to help her evaluate the business.
The sale price will be 3.50 for a hot dog, potato chips and a drink. The projected cost per sale is 1.35. Condiments are projected to be $ .35 per sale. The hot dog cart will be leased for a 12 month period for $ 425 per month. Liability insurance will be $ 1,200 per year. The owner wants to earn $ 20,000 per year and assumes a tax rate of 20%. An annual profit is projected to be $ 10,000.
Complete the Break Even analysis and answer the following questions.
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Order Paper Now- What are the total variable costs per unit?
- What is the contribution margin ratio?
- What are the total fixed costs?
- What are the total expenses per the income statement?
- How many units must be sold per year?
- If the sales price changes to $ 4.00 and the owner salary changes to $ 15,000, how many units must be sold?
- Using Word, summarize your findings and make a recommendation to your friend.
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