A restaurant averages sales of $120,000 when serving 20,000 guests. The restaurants variable costs when serving 20,000

Question:

A restaurant averages sales of $120,000 when serving 20,000 guests. The restaurant’s variable costs when serving 20,000 guests is $90,000. The contribution margin per guest is $1.50. Fixed monthly costs are $ 50,000. What is this restaurant’s monthly breakeven point in sales dollars?

a. $66,667

b. $76,667

c. $86,667

d. $56,667

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...