Enriquez Food Services Company operates, and services snack vending machines located in restaurants, gas stations and factories in four southwestern states. The machines are rented from the manufacturer. In addition, Enriquez must rent the space occupied by its machines. The following expense and revenue relationships pertain to a contemplated expansion programme of 40 machines. Fixed monthly expenses follow:

These questions relate to the given data unless otherwise noted. Consider each question independently.

1. What is the monthly break-even point in number of units (snacks)? In euro sales?

2. If 40,000 units were sold, what would be the company’s net income?

3. If the space rental cost was doubled, what would be the monthly break-even point in number of units? In euro sales?

4. Refer to the original data. If, in addition to the fixed space rent, Enriquez Food Services Company paid the vending machine manufacturer €.02 per unit sold, what would be the monthly break-even point in number of units? In euro sales?

5. Refer to the original data. If, in addition to the fixed rent, Enriquez paid the machine manufacturer €.05 for each unit sold in excess of the break-even point, what would the new net income be if 40,000 units were sold?

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Machine rental: 40 machines @ €53.50 Space rental: 40 locations @ €38.80 Part-time wages to service the additional 40 machines Other fixed costs Total monthly fixed costs Other data follow: Selling price Cost of snack Contribution margin €2,140 1,552 2,008 300 €6,000 Per unit (snack) Per €100 of sales €1.00 100% .80 80 € .20 20%