Using formula, what is the break-even point?
Using this formula, what is the break-even point? In other words, how many meals, at $7.00, would need to be sold before you start making a profit? Your variable cost per order is $3.00 in food costs and paper products. Of course, there are also fixed costs (whether you sell one or a hundred). These include your building lease ($2,000 per month, electricity $500 per month, and labor $3,100 per month).
Breakeven Point (number of meals) = Fixed Costs/(Average Order Price – Average Order Cost).
The problem is that, even after being in business for a year, your restaurant is selling slightly less than 1,000 meals. There are several actions that can be taken to reach your break-even point, which is necessary if you are to remain in business. As the marketing director is responsible for the product, price, promotion, and placement, you control many of the tools to make necessary adjustments.
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