Extensions of the CVP Basic Model—Semifixed (Step) Costs Cathy’s Cafeteria serves only a fixed-price lunch. The price of $9 and the variable cost of $5 per meal remain constant regardless of volume. Cathy can increase lunch volume by opening and staffing additional check-out lanes. Cathy has three choices:

Required

a. Calculate the break-even point(s).

b. If Cathy can sell all the meals she can serve, should she operate at one, two, or three lanes? Sup- port your answer.

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1 Lane 2 Lanes 3 Lanes Monthly Volume Range (Number of Meals) 0-5000 5,001-8,000 8,001-10,000 Total Fixed Costs $22,000 30,000 37,000