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19 October, 11:12

Rosalie is thinking of advertising her sandwich shop on the radio. She is considering a package of 60 radio spots for $5,000. She only sells Cuban sandwiches for $10 and her average cost per sandwich is $5. How many additional sandwiched would she have to sell to breakeven if she buys the radio spots?

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  1. 19 October, 12:17
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    It need to sale 1,000 additional sandwiches to break-even

    Explanation:

    The contribution margin per sandwich is $5 (10 sale price - 5 variable)

    the radio spot will be considered a fixed cost thus, to break even we divide it by the contribution:

    $5,000 / $5 per sandwich = 1,000 sandwiches
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