Bella's Burgers sells burgers, fries, and milkshakes. Last month, Bella's Burgers sold $20,000 of burgers, which had associated variable costs of $8,000;$10,000 of fries, which had associated variable costs of $4,000; and $5,000 worth of milkshakes, which had associated variable costs of $2,000. Bella's Burgers had total fixed costs of $6,000. What is Bella's company-wide break-even point? a) $21,000 b) $15,000 a) $35,000 d) $10,000

Question

Bella's Burgers sells burgers, fries, and milkshakes. Last month, Bella's Burgers sold  $20,000 of burgers, which had associated variable costs of  $8,000;$10,000 of fries, which had associated variable costs of  $4,000; and  $5,000 worth of milkshakes, which had associated variable costs of  $2,000. Bella's Burgers had total fixed costs of  $6,000. What is Bella's company-wide break-even point? a)  $21,000 b)  $15,000 a)  $35,000 d)  $10,000

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Calculate Revenue and Costs: Calculate the total revenue and total variable costs. Total revenue from burgers, fries, and milkshakes is $20,000 + $10,000 + $5,000. Total variable costs from burgers, fries, and milkshakes is $8,000 + $4,000 + $2,000.Perform Calculations: Perform the calculations from Step 1. Total revenue = $20,000 + $10,000 + $5,000 = $35,000. Total variable costs = $8,000 + $4,000 + $2,000 = $14,000.Find Contribution Margin: Calculate the contribution margin. Contribution margin is the difference between total revenue and total variable costs. Contribution margin = Total revenue - Total variable costs.Calculate Break-even Point: Perform the calculation from Step 3. Contribution margin = $35,000 - $14,000 = $21,000.Perform Break-even Calculation: Calculate the break-even point. The break-even point is where total revenue equals total costs (variable costs + fixed costs). Break-even point = Total fixed costs / Contribution margin per dollar of revenue.Simplify Calculation: Perform the calculation from Step 5. Break-even point = $6,000 / ($21,000 / $35,000).Perform Final Calculation: Simplify the calculation from Step 6. Break-even point = $6,000 / (3/5).Perform the calculation from Step 7. Break-even point = $6,000 * (5/3) = $10,000.

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