The cafeteria at Huntington Products, Inc., sells meals to the company’s employees. Its goal is to break even. It has the following information available for the past three months of operations:
December January February
Number of meals served 3,000 5,000 8,000

Cost of food sold $18,000 $30,000 $48,000
Staff salaries and fringe benefits 14,500 16,500 19,500
Rent and depreciation 4,000 4,000 4,000
Utilities and other 2,100 3,300 5,100
Total $38,600 $53,800 $76,600

In March, the cafeteria expects to serve 10,000 meals.

QUESTIONS:
(a) Develop a cost equation for the cafeteria that can be used to predict total monthly costs.
(b) During February, how much would the price per meal need to be for the cafeteria to break even?
(c) If the cafeteria’s price is $10.10 per meal, how many meals must it sell to break even?

Answer rating: 100% (QA)

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