Extensions of the CVP ModelSemifixed (Step) Costs

Sam's Sushi serves only a fixed-price lunch. The price of $10 and the variable cost of $4 per meal remain constant regardless of volume. Sam can increase lunch volume by opening and staffing additional check-out lanes. Sam has three choices:

Required: Monthly Volume Range (Number of Meals) Total fixed cost

1 lane ........ 0-5,000 $33,000

2 lanes.............. 5,001-8000 39,000

3 lines .......... 8,001-10,000 52,500

a. Calculate the break-even point(s).

b. If Sam can sell all the meals he can serve, should he operate at one, two, or three lanes?

Support your answer.