Andy's Ale House, a pub located in a university community, serves as a gathering place for the university's more social scholars. Andy sells draft beer and all brands of bottled beer at a contribution margin of $0.60 a beer. Andy is considering also selling hamburgers during selected hours. His reasons are twofold. First, hamburgers would attract daytime customers. A hamburger and a beer are a quick lunch. Second, he has to compete with other local bars, some of which provide more extensive menus. 

Andy analyzed the costs as follows:

Andy planned a selling price of $1.10 per hamburger to lure many customers. For all questions, assume a 30-day month. 

1. What are the monthly and daily break-even points, in number of ham- burgers? 

2. What are the monthly and daily break-even points, in dollar sales? 

3. At the end of two months, Andy finds he has sold 3,600 hamburgers. What is the operating profit per month on hamburgers? 

4. Andy thinks that at least 60 extra beers are sold per day because he sells hamburgers. This means that 60 extra people come to the bar or that 60 buy an extra beer because they are attracted by the hamburg- ers. How does this affect Andy's monthly operating income? 

5. Refer to requirement 3. How many extra beers would have to be sold per day so that the overall effects of the hamburger sales on monthly operating income would be zero?

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Monthly fixed expenses: Wages of part-time cook $1,200 Other 360 Total $1,560 Variable expenses per hamburger Rolls $0.12 Meat @ $2.80 per kilogram (7 hamburgers per kilogram) 0.40 Other 0.18 Total $0.70