Reference no: EM133008534

Problem - Break-Even Analysis (Multiproduct Model) - West Side Deli is a local family-owned restaurant that has built up a reputation of providing high quality lunches to its customers. Cassandra has been able to effective use the multiproduct Break-Even analysis to analyze the deli's current product offerings, and now wants to plan for a future addition: cupcakes! After reviewing the most recent product financials and projections for cupcakes, she has compiled the following information:

Sandwiches: selling price = $6.00 per sandwich; variable cost = $3.50 per sandwich; annual forecasted sales units = 30,000 sandwiches

Soups: selling price = $4.75 per soup; variable cost = $2.50 per soup; annual forecasted sales units = 24,000 soups

Drinks: selling price = $1.75 per drink; variable cost = $0.75 per drink; annual forecasted sales units = 37,000 drinks

Cupcakes: selling price = $4.00 per cupcake; variable cost = $2.00 per cupcake; annual forecasted sales units = 17,000 cupcakes

The overall monthly fixed costs are $4,250 per month. Note that West Side Deli operates Monday - Friday (i.e., 5 days per week) and is closed two weeks per year (i.e., 50 weeks per year).

Required -

a) Determine the annual revenue Break-Even Point (BEP$) for West Side Deli. Please write out the manual calculations for at least one full product line (e.g., Cupcakes). Also, show the manual setup and work for the final BEP$ calculation.

b) Determine the daily revenue Break-Even Point (BEP$) for West Side Deli. Please show the manual setup and work for the final BEP$ calculation.

c) Determine the daily volume Break-Even Point (BEPx) for each menu item at West Side Deli. Please show the manual setup and work for at least one of the final BEPx calculations (i.e., at least one menu item).