Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Corner Tavern is a small-town bar that sells only bottled beer. The average price of a bottle of beer at the tavern is $3.25

image text in transcribedimage text in transcribed

Corner Tavern is a small-town bar that sells only bottled beer. The average price of a bottle of beer at the tavern is $3.25 and the average cost of a bottle of beer to the tavern is $1.05. The tavern is open every night. One bartender and two to three waitresses are on duty each night. The fixed costs (salaries, rent, tax, utilities, etc.) total $259,000 per year. (Do not round intermediate calculations. Round the final answers to the nearest whole number.) a. The owner wishes to know how many bottles of beer the tavern must sell during the year to start making profit. No. of bottles b. What is the revenue at the break-even quantity found in the part a? Revenue $ c. This part of the question is not part of your Connect assignment. d. If Corner Tavern sells 125,000 bottles of beer a year, would it make a profit? (Hint: Draw the annual revenue and total annual cost vs. the number of bottles of beer sold per year. Make sure that the y-axis is to scale.) Yes e. The owner thinks $50,000 is a reasonable annual profit. How many bottles of beer should the tavern sell to make $50,000 profit? No. of bottles f. An available option is to open the tavern earlier on the weekends. The attraction would be a discount of $0.50 off the regular price. The extra salaries of waitresses and bartender for the whole year are estimated to be $28,000. How many extra bottles of beer must the tavern sell in order to break-even in this option? No. of extra bottles

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Operations Management Creating Value Along the Supply Chain

Authors: Roberta S. Russell, Bernard W. Taylor

7th Edition

9781118139523, 0470525908, 1118139526, 978-0470525906

More Books

Students also viewed these General Management questions