Question

Using the Breakeven formula, compute the breakeven quantity for the following business example: You are a small burrito stand at a nightly music event at the city part in the summers (3 months in the summer). You sell your burrito for $1.75. Meat costs $0.30/burrito, beans cost $0.10/burrito, cheese costs $0.05, a tortilla costs $0.08 and the toppings (salsa, onions, etc.) costs $0.05 a burrito. Taxes are $300/season (season is 3 months long), insurance is $120/month, location rent is $500/month, utilities are $45/month. You have 2 people making $12 per hour working a 5 hour shift per evening music event.

Assume there are 30 days in a month. What is the daily breakeven quantity (remember, you must convert all costs to a daily value, assume there are 30 days in a month)?

What is the daily breakeven quantity if your meat costs go up to $0.35?

The event typically draws 5000 people. The burrito segment is not that large however. Only 40% of those in attendance typically buy food and only 30% like Mexican food. What is the actual segment size for this burrito vendor and this event?

Answer 1