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The Teri Aki Diner Is a New Buffet-Style Restaurant Offering

Question 52

Essay

The Teri Aki Diner is a new buffet-style restaurant offering stir-fry and Thai dishes. The buffet has a fixed price of $8.50 per person. The estimated food costs are $2.00 per person, regardless of volume. Fixed costs are related to the number of buffet lines that are maintained, with the estimated costs as follows:
 Monthly volume  Fixed Costs 1 line 04,000$30,0002 lines 4,0016,000$37,0003 lines 6,0017,500$40,000\begin{array} { l r r } & \text { Monthly volume } & { \text { Fixed Costs } } \\\hline \text {1 line } & 0 - 4,000 & \$ 30,000 \\2 \text { lines } & 4,001 - 6,000 & \$ 37,000 \\3 \text { lines } & 6,001 - 7,500 & \$ 40,000\end{array}
Required:
Determine the break-even point(s).

Correct Answer:

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1 line = $30,000/($8.50 ? $2.00) = 4,616...

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