Break-even point case study

 Sam’s Grill

Sam runs a small burger cafe called Sam’s Grill. He has borrowed funds to purchase a property, leased machines, kitchen equipment, and hired two staff members. Sam sells his burgers at a premium price of $10 each. In 2023, he incurred the following expenses( Table 1)

Description	Costs
Lease cost	$220 per week
Mortgage payment	$180 per week
Sam’s salary	$1200 per month
Major ingredients	$2.50 per burger
Wages	$2 per burger
Electricity and gas	$1 per burger
Other expenses	$0.50 per burger
Selling price	$10 per burger

Questions:

a)     Define the term fixed cost [2 marks]

b)    Define the term variable cost [2 marks]

c)     Calculate total monthly fixed cost   for Sam’s Grill [1 mark]

d)    Calculate total variable cost per burger [ 1 mark]

e)     Using  figures given in  Table 1, calculate   the number of  burgers to be sold per month to break-even [ 2 marks]

f)      Using your answer to the  question (e), construct a fully labelled  break-even graph [ 6 marks]

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