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January 4, 2019
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(Solved) : As a prospective owner of a club known as the Red​ Rose

As a prospective owner of a club known as the Red​ Rose, you are interested in determining the volume of sales dollars necessary for the coming year to reach the​ break-even point. You have decided to break down the sales for the club into four​ categories, the first category being beer. Your estimate of the beer sales is that 36,000 drinks will be served. The selling price for each unit will average $1.75; the cost is $1.25 The second major category is​ meals, which you expect to be 10,000 units with and average price of $10 and cost of $6. The third major category is desserts and​ wine, of which you also expect to sell 10,000 units, but with an average price of $2.75 per unit sold and a cost of $1 per unit. The final category is lunches and inexpensive​ sandwiches, which you expect to total 20,000 units at an average price of $6 with a food cost of $3.25. Your fixed cost (rent, utilities and so on) is $2,000 per month plus $2,200 per month for entertainment.

a) For Red​ Rose, the monthly​ break-even point in dollars​ = ​$___per month ​(round your response to two decimal​ places).

b) If Red Rose is open 30 days per​ month, then the expected number of meals that need to be sold each day​ = _____ meals per day

Expert Answer


a)

Average selling price = beer sales * beer price + meals sales * price + desserts sales * price

OR
OR

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