Please take the time to explain and over explain, I have answers and have been able to come up with solutions but would like to see things mathmatically/clearly
Question 2 (Costs)
Cindy runs a Vietnamese pho restaurant. Each regular size of pho sells for $5.50. The variable cost per bowl is $2.50. She currently sells 150 bowls of pho per day. Cindy is considering a price change.
What is the minimum number of additional bowls that she has to sell to break even on a price cut to $5.00? (30 bowls)
Re-calculate the answer to part (a) assuming that the variable cost per bowl drops to $2.30. (17 bowls)
Instead of breakeven, Cindy decides that she will change prices only if she makes an extra $50. What is the maximum decrease in the number of bowls that she can tolerate and still achieve these additional profits on price increase to $6.00? (Assume no change in costs) (7 bowls)
I may have a question that includes changes in Fixed Costs.
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