# Southwestern University Food & Beverage

Topics: Costs, Variable cost, Fixed cost Pages: 1 (366 words) Published: October 28, 2014

President Starr,
Here are the calculations for the five areas of concern that you mentioned to me earlier. 1. Total fixed cost that must be covered at each of the games: Fixed costs per game include \$20,000 food service salaries, \$4,800 to cover costs of 6 booths

\$1,260 hourly wages for 36 booth employees
Total fixed costs per game: 20,000 + 4,800 + 1,260 = \$26,060 2. The portion of the fixed cost allocated to each of the items: Soft drink sales need to cover 25% of fixed costs, or \$6,515 Coffee sales need to cover 25% of fixed costs, or \$6,515

Hot dog sales need to cover 20% of fixed costs, or \$5,212
Hamburger sales need to cover 20% of fixed costs, or \$5,212
Miscellaneous snacks need to cover 10% of fixed costs, or \$2,606 3. What unit sales would be at break-even for each item: A soft drink costs \$0.75 and is sold for \$1.50, which is \$0.75 of revenue. To reach the soft drink break-even point, \$6,515/\$0.75 = 8,687 must be sold. A cup of coffee brings in \$1.50 in revenue. \$6,515/\$1.50 = 4,343 cups of coffee need to be sold. A hot dog brings in \$1.20 in revenue. \$5,212/\$1.20 = 4,343 hot dogs need to be sold. A hamburger brings in \$1.50 in revenue. \$5,212/\$1.50 = 3,475 hamburgers need to be sold. A miscellaneous snack brings in \$0.60 in revenue. \$2,606/\$0.60 = 4,343 snacks need to be sold. 4. The dollar sales for each to be at these break-even points 8,687 soft drinks at \$1.50 each bring in \$13,030.50.

4,343 cups of coffee at \$2.00 each bring in \$8,686.00
4,343 hot dogs at \$2.00 bring in 8,686.00.
3,475 hamburgers at \$2.50 each bring in \$8,687.50
4,343 snacks at \$1.00 each bring in \$4,343.00
Total break-even food service sales: \$43,433.00
5. Realistic sales estimates per attendee for attendance of 60,000 and 35,000. Spending estimate per attendee for a crowd of 35,000 are \$43,433/35,000 = \$1.24 per attendee. Spending estimate per attendee for a crowd of 60,000 are \$43,433/60,000 = \$0.72 per attendee. Reference

Render, B., & Stair, R....