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Problem - Sam's Sushi serves only a fixed-price lunch. The price of $10 and the variable cost of $4 per meal remain constant regardless of volume. Sam can increase lunch volume by opening and staffing additional check-out lanes. Sam has three choices.
Monthly Volume Range Total
(Number of Meals) Fixed Costs
1 Lane 0 - 5,000 $33,000
2 Lanes 5,001 - 8,000 39,000
3 Lanes 8,001 - 10,000 52,500
Required -
A. Calculate the break-even point(s)
B. If Sam can sell all the meals he can serve, should he operate at one,two, or three lanes? Support your answer.
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