cvp assumption/ analysis

Scenario: As an aspiring chili cook-off chef you have decided to consider tossing caution to the wind, quit your current occupation and take life on the road by starting a traveling food truck. You do some research and find the following costs involved in running such an establishment. Small (12 oz. size) (need 8 oz. of steak) (need 6 oz of onion) (need 2 oz peppers) DIRECT MATERIAL INGREDIENTS Steak ($15 for a 3 lbs.-48 oz) Onion ($2 for 1 lb.- 16 oz.) Chili Peppers (S16 for 8lb,-128 oz.) Spices ($35 for 10 lb.- 160oz) Broth (S0.50 for 1 can 12oz) Large (18 oz, size) (need 12 oz of steak) (need 9 oz. of onion) (need 3 oz peppers) (need 5 oz) (need 1.5 can) (need 3 oz.) (need I can) Fixed costs: Food Truck rental: $500 a month Cleaning and other miscellaneous supplies: $100 a month Four sets of tables and benches for customers to sit outside: $240 per set Four table and bench sets are needed Tables and benches expected to have I year of useful life Annual insurance: $600 a year REQUIREMENTS OF THE CASE In order to answer the questions below, you will need to make CVP assumptions 1) Using the above information, determine the amount of chili you will need to sell to break even each month in the following price levels and sales mix that you have determined to be able to remain competitive in the high stakes world of chili truck sales. (hint: sales must be in full orders of chili) Large Small Scenario A Sales Mix 40% 60% Price Scenario B Sales Mix Price 80% 20% $8 Scenario C Sales Mix Price 40% 60% $10 2) Now, assume that you are currently making a pre-tax salary of $60,000. Determine the amount of chili you will need to sell to maintain your current salary needs for each scenario, Assume that you are only able to operate your food truck 2 days a week 3) Create an Income Statement for each 4) Assuming you make $60,000 pre-tax salary at your current job and a reasonable expectation of chili sales in units(net small and large) are 40 per operating day, should you leave your job to open the chili truck in either scenario A, B, or C? 5) Using the outcomes in question 4. What could a potential hindrance be when moving from scenario A to C in making the desired sales considering the competitive nature of selling award winning Texas style chili? 6) Would this endeavor be considered one that has high or low operating leverage and why? a la $a