Extensions of the CVP Model—Semifixed (Step) Costs Sam’s Sushi serves only a fixed-price lunch. The 1 answer below »
Extensions of the CVP Model—Semifixed (Step) Costs
Sam’s Sushi serves only a fixed-price lunch. The price of $10 and the variable cost of $4 per meal remain constant regardless of volume. Sam can increase lunch volume by opening and staffing additional check-out lanes. Sam has three choices:
Monthly Volume Range
Total
(Number of Meals)
Fixed Costs
1 Lane
0–5,000
$33,000
2 Lanes
5,001–8,000
39,000
3 Lanes
8,001–10,000
52,500
Required
a. Calculate the break-even point(s).
b. If Sam can sell all the meals he can serve, should he operate at one, two, or three lanes? Support your answer.