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Sam's Sushi serves only a fixed-price lunch. The price of $10 and the variable cost of $6 per meal remain constant regardless of volume. Sam can increase lunch volume by opening and staffing additional check¬out lanes. Sam has three choices, as follows. Monthly Volume Range Total (Number of Meals) Fixed Costs
1 Lane
0-5,000
$ 23,000
2 Lanes
5,001-8,000
29,000
3 Lanes
8,001-10,000
36,600
Required:
Question a. Calculate the break-even point(s).
Question b-1 Calculate the profit (or loss) for each alternative, assuming Sam can sell all the meals he can serve.
Question b- 2 Should Sam operate at one, two, or three lanes?
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