Calculating the Break-Even Point for Kelly's Gourmet Burger Food Truck

What is the break-even point for Kelly's hamburgers?

a. 1,200 burgers

b. 1,826 burgers

c. 420 burgers

d. 3,500 burgers

Answer:

The break-even point for Kelly's hamburgers is approximately 1,826 burgers.

To calculate the break-even point for Kelly's gourmet burger food truck, we need to take into account her total fixed costs, variable costs per burger, and sales price per burger.

Fixed costs are expenses that remain constant regardless of the number of burgers sold. In Kelly's case, her total fixed cost per annum is R42,000.

Variable costs, on the other hand, fluctuate based on the number of burgers sold. Kelly's variable cost per burger is R12, while the sales price per burger is R35.

The break-even point can be calculated using the formula:

Break-even point = Total fixed costs / (Sales price per burger - Variable cost per burger)

By substituting the given values into the formula, we find:

Break-even point = R42,000 / (R35 - R12) Break-even point = R42,000 / R23 Break-even point = 1,826.09 burgers

Therefore, Kelly needs to sell approximately 1,826 burgers to cover her total costs and reach the break-even point before making a profit.