A "Little Sis" Restaurant Has Been Opened as a Prototype

question 23

Multiple Choice

A "Little Sis" restaurant has been opened as a prototype to test the concept of a smaller facility with a limited menu. Experience during the first two years was as follows:
The average sale is $10 per customer. Use the following partially completed graph to determine the break-even quantity graphically. Then refine your solution by solving it algebraically.

• A) The break-even quantity is fewer than or equal to 30,000 customer visits.
• B) The break-even quantity is more than 30,000 customer visits and fewer than or equal to 50,000 visits.
• C) The break-even quantity is more than 50,000 visits and fewer than or equal to 70,000 visits.
• D) The break-even quantity is more than 70,000 customer visits.

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Definitions:

Unit Sales

The measurement of the number of individual items or units sold by a company.

Monthly Target Profit

The specific amount of profit a company aims to achieve within a month.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, influenced by the proportion of fixed costs in total costs.

Net Operating Income

Income produced by a firm's regular activities, not including taxes and interest.