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Sally’s Salads are trying to decide whether to sell premade salads or offer a salad bar. If they offer premade salads, the fixed cost will be $200 and the per unit cost is $5.50. If they offer a salad bar, the fixed costs are $441 and the per unit cost is $2.69. The price charged per salad will be $8.50 for either premade or the salad bar. What is the breakeven quantity for the salad bar? Round to the nearest integer. (Do not include units.)
Expert Answer
For salad bar,
Fixed cost = $441
Unit cost = $2.69
Price per unit = $8.5
Hence,
Breakeven quantity = Fixed cost/(Price per unit – variable cost per unit)
Breakeven quantity = 441/(8.5-2.69)
Breakeven quantity = 75.9 or 76
Therefore 76 salad bar is the breakeven quantity for the salad bar.
