Question
Please answer all three questions and show all work Peter is a businessman from Chicago who for many years has been engaged in a coin
Please answer all three questions and show all work
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 Peters 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. The total fixed cost is $10,000 and the variable cost for serving one customer is $7.00.
Month | Customers | Costs |
September | 810 | 15670 |
October | 700 | 14900 |
November | 680 | 14760 |
December | 710 | 14970 |
January | 610 | 14270 |
February | 600 | 14200 |
March | 680 | 14760 |
April | 720 | 15040 |
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?
2) Lets 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?
3) Lets 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?
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