Backstreets make month in order for service to break even

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Reference no: EM13992185

The owner of backstreet’s Italian restaurant are considering starting a delivery service for pizza and their are other Italian dishes in the small college town where they are located. They can purchase a used delivery van and have it painted with their name and logo for $21,500. They can hire part-time drivers who work in the evenings from 5 PM to 10 PM for eight dollars per hour. The drivers are mostly college students who study at the restaurant when they are not making deliveries. During the day, there are so few deliveries that the regular employees can handle them. The owners estimate that the van will last 5 years(365 days per year) before it has to be replaced and that each delivery will cost about one dollar and $1.35 in gas and other maintenance costs (including tires, oil, scheduled service etc). They also estimate that on average each delivery order will cost $15 for direct labor and ingredients to prepare and package, and will generate $34 in revenue.

How many delivery orders must backstreets make each month in order for the service to break even?

Reference no: EM13992185

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