Peter is a businessman from Chicago who for many years has been engaged in a coin laundry business. More recently, Peter bought an existing restaurant and has started offering all-you-can-eat buffet. Peter charges his customers $10 for the buffet and an additional $2 for the soft drinks. According to Peter's observations, only about half of his customers order soft drinks while the rest is satisfied with water which is offered free of charge. Despite the fact that the restaurant has been in operation for several months, Peter feels that it is hardly generating the cash he expected.To improve his bottom line and to possibly establish a new price policy, Peter has started to record all costs related to running his restaurant.

Open theChicagoRestaurant-1.txtfile located at the Business Analytics website:https://www.small-big-data.com

The data set shows the month, the number of customers visiting the restaurant each month and the total costs associated with running the business.

QUESTION 1

1. Compute the total fixed cost for Peter's all-you-can-eat buffet restaurant. Based on the data, what is Peter's total fixed cost? Note: The total fixed cost is the portion of mixed costs (total costs) that stays constant over a wide range of volume. In essence, the total fixed cost is the intercept of the cost line.

A.$9,000

B.$9,500

C.$10,000

D.$10,500

E.$11,500

F.$12,500

G.None of the above

QUESTION 2

1. Compute the variable cost for serving one customer in Peter's restaurant. Based on the data, what is the variable cost for serving one customer? Note: Total variable costs change in direct proportion to changes in volume. In essence, the variable cost per unit (e.g. one customer) is the slope of the cost line.

A.$6.50

B.$7.00

C.$7.50

D.$8.00

E.$8.50

F.$9.50

G.$10.50

H.$11.50

I.None of the above

QUESTION 3

1. If Peter retains his current price policy, what is his breakeven point? How many customers does Peter need to attract per month to breakeven?

A.800

B.1,000

C.1,500

D.2,000

E.2,500

F.2,800

G.3,000

H.4,000

I.5,000

J.6,000

K.None of the above

QUESTION 4

1. Let's assume that Peter retains his current price policy and his goal is to generate an operating income of $10,000 per month, as he hoped while engaging in this business. Based on the data, how many customers does Peter need to attract per month to achieve his goal?

A.800

B.1,000

C.1,500

D.2,000

E.2,500

F.2,800

G.3,000

H.4,000

I.5,000

J.6,000

K.None of the above

QUESTION 5

1. Let's assume that Peter retains his current price policy and his objective is to generate an operating income of $10,000 per month. Based on the data, how much sales revenue does Peter need to generate each month to achieve his objective?

A.$7,500

B.$17,500

C.$27,500

D.$30,500

E.$37,500

F.$47,500

G.$50,000

H.$55,000

I.$59,000

J.$60,000

K.$70,000

L.None of the above