Question 3. Pricing: (30 points)

Congratulations! You just won your state lottery and will be receiving a check for $1 million. You have always wanted to start your own food truck business A new food truck with kitchen and other related equipment costs about $100,000. Other fixed costs including salaries, gas for the truck, licensing fees are estimated to be about $50,000 per year. You decided to offer traditional Mediterranean cuisine. Variable costs include food and beverages estimated at $6 per platter (meat, rice, vegetable and pita bread). Meals will be priced at $10.

1. What is the sunk cost? (10 points)
2. What's the relevant cost? (10 points)
3. What's the breakeven point for this business? (10 points)