Charlie\'s Hotdog Stand sells hotdogs for $2.50 each. The variable costs per hot
ID: 2389344 • Letter: C
Question
Charlie's Hotdog Stand sells hotdogs for $2.50 each. The variable costs per hotdog are $.50. Charlie's fixed costs are currently $800 per month. Charlie is considering expanding his business to three hotdog stands which will increase fixed costs per month by $1,200.Refer to the Charlie's Hotdog Stand information above. If Charlie does expand his business to three stands, how many additional hotdogs will need to be sold per month in order to break even?
Answer
a. 1,000
b. 480
c. 600
d. 480
2 points
Question 55
Refer to the Charlie's Hotdog Stand information above. If Charlie does expand his business to three stands, how many hotdogs will need to be sold per month in order to earn a target profit of $5,000?
Answer
a. 2,500
b. 2.800
c. 3,100
d. 3,500
Explanation / Answer
Contribution margin = 2.50 - 0.50 = $2.00 per hot dog. 1,200/2.00 = 600 First answer: C, 600. profit plus fixed costs = 5000 + 2000 = 7000. 7000/2.00 = 3500 Second answer: D, 3,500