Andrew Miller recently opened a new doughnut shop near Cornwall, England. He sells doughnuts in packets of four each. The average price of a doughnut box is $4.00 and each box costs Andrew an average of $2.80. He has hired two assistants at a monthly salary of $2,000 per assistant. His rent, utilities, and other fixed operating costs are $2,600 per month. 

Andrew is considering selling hamburgers along with doughnuts to further diversify his menu and attract more customers. The price of each hamburger will be $1.50. Andrew will buy buns for $1.56 per dozen and ground beef for $1.20 per pound. Each pound of ground beef will make three hamburgers. Other ingredients will cost an average of $0.21 per hamburger. Andrew will also need to hire a part-time cook at $1,500 per month. Other additional fixed costs will run about $400 a month. 

1. If Andrew sells only doughnuts, how many boxes does he have to sell every month to earn a profit of $600? 

2. If Andrew sells only doughnuts, how many boxes does he have to sell every month to earn a profit of 10% on sales? 

3. Suppose Andrew decides to add hamburgers to his menu. How many hamburgers does he need to sell to break even on the hamburgers? Assume that there is no effect on doughnut sales. 

4. The main reason Andrew wanted to add hamburgers to his menu was to attract more customers. Suppose that 2,000 extra customers came to his shop each month because of the availability of hamburgers and that each of them bought one hamburger and two boxes of doughnuts on an average. Compute the added profit (or loss) generated by these extra customers. 

5. Andrew was not sure how many new customers would be attracted by the availability of hamburgers. Give Andrew some advice about how many new customers would be needed to just break even on the new business if each new customer bought one hamburger and one box of doughnuts. Include an assessment of the consequences of volume falling below or above this break-even point. 

6. Andrew could offer a superior quality hamburger if he spends 50% more on the ingredients. He could then charge $2.50 for each. Explain how Andrew could determine whether the superior quality hamburgers would be more profitable than the regular hamburgers.