Annie Russell, a student at Tech, plans to open a hot dog stand inside Tech’s football stadium during home games. There are seven home games scheduled for the upcoming season. She must pay the Tech athletic department a vendor’s fee of $3,000 for the season. Her stand and other equipment will cost her $4,500 for the season. She estimates that each hot dog she sells will cost her $0.35. She has talked to friends at other universities who sell hot dogs at games. Based on their information and the athletic department’s forecast that each game will sell out, she anticipates that she will sell approximately 2,000 hot dogs during each game.

A. How many hot dogs will she need to sell to break even if she sold them at $4.50 each (or at least within a couple of dollars of breaking even)?

B. At what price will she have to sell her hot dogs to break even if she expects to sell 2000 hot dogs over the season?

C. If she sells 2000 hot dogs, but due to market forces must sell her hot dogs at $4.00, what must she set her variable costs to in order to break even?

Answer rating: 100% (QA)

Fixed cost includes cost that doesnt change throughout the business H... View the full answer