A friend of yours has approached you about starting a hot dog stand at the courthouse. She has

collected the following information and would like you to help her evaluate the business.

The sale price will be 3.50 for a hot dog, potato chips and a drink. The projected cost per sale is 1.35.

Condiments are projected to be $ .35 per sale. The hot dog cart will be leased for a 12-month period for

$ 425 per month. Liability insurance will be $ 1,200 per year. The owner wants to earn $ 20,000 per year

and assumes a tax rate of 20%. An annual profit is projected to be $ 10,000.

Complete the Break-Even analysis and answer the following questions.

1. What are the total variable costs per unit?

$1.35 + $0.35 = $1.70

2. What is the contribution margin ratio?

$3.50 - $1.70 = $1.80/$3.50 = 51%

3. What are the total fixed costs?

$5,100 + $1,200 + 20,000 + 4,000 = $30,300

4. What are the total expenses per the income statement?

$38,061 + $30,300 = $68,361

5. How many units must be sold per year?

($30,300 + $10,000)/ $1.80 = 22,389

6. If the sales price changes to $ 4.00 and the owner salary changes to $ 15,000, how many units must be sold?

(24,300 + $10,000)/ $2.30 = 14,913

7. Using Word, summarize your findings and make a recommendation to your friend.

If the hot dog costs $3.50 and her salary is $20,000, she must sell 22,389 hot dogs to break even. If the hot dogs cost $4 and her compensation drops to $15,000, she simply has to sell 14,913 hotdogs. As a result, I propose that she sell the hot dogs for $4 apiece, with a compensation of $15,000.

8. Include both spreadsheet scenarios in your submission

Please help solve this.

H12 fx A B D E F G H 1 J K L M N 0 R Step 1 Enter sale price per unit 1 Sale price per unit $ $ 1.35 100% - Amount Per Unit Step 2 Enter variable costs description and per unit cost D 1 Description XXXXX XXXXX XXXXX XXXXX XXXXX Total Variable Costs 2 $ $ 0% Contribution margin per unit s 1.35 100% Contribution margin percentage Description Annual Amount Step 3 Enter fixed costs description and annual cost XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX Total Fixed Costs $ 3 4 5 6 7 B 9 D 1 2 3 4 5 6 7 B 9 D 1 2 3 4 5 6 7 B 9 D 1 2 3 4 5 6 7 B 9 Annual Amount Step 4 Enter profit component Profit Component Data entry may be optional depending on assignment instructions Breakeven Point Units 0 0 $ Dollars Breakeven Analysis Formula FC+PC/CM / Required Sales Volume Sales Per Month Sales Per Week Sales Per Day 0 $ 0 $ 0 $ Proof Income Statement 1.35 Sales in units Sale price per unit Total sales Sales in units $ 0.00 Sheet1 + Ready 5 + 100% H12 fx A B D E F G H 1 J K L M N 0 R Step 1 Enter sale price per unit 1 Sale price per unit $ $ 1.35 100% - Amount Per Unit Step 2 Enter variable costs description and per unit cost D 1 Description XXXXX XXXXX XXXXX XXXXX XXXXX Total Variable Costs 2 $ $ 0% Contribution margin per unit s 1.35 100% Contribution margin percentage Description Annual Amount Step 3 Enter fixed costs description and annual cost XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX XXXXX Total Fixed Costs $ 3 4 5 6 7 B 9 D 1 2 3 4 5 6 7 B 9 D 1 2 3 4 5 6 7 B 9 D 1 2 3 4 5 6 7 B 9 Annual Amount Step 4 Enter profit component Profit Component Data entry may be optional depending on assignment instructions Breakeven Point Units 0 0 $ Dollars Breakeven Analysis Formula FC+PC/CM / Required Sales Volume Sales Per Month Sales Per Week Sales Per Day 0 $ 0 $ 0 $ Proof Income Statement 1.35 Sales in units Sale price per unit Total sales Sales in units $ 0.00 Sheet1 + Ready 5 + 100%