A restaurant has fixed costs of $156.25 per day and an average unit cost of $4.75 for each meal served. If a typical meal costs $6, how many customers must eat at the restaurant each day for the owner to break even?
I'll be glad to check your answer.
To find out how many customers must eat at the restaurant each day for the owner to break even, we need to consider the fixed costs and the unit cost per meal.
Let's say the number of customers who eat at the restaurant each day is "x".
The fixed costs per day are $156.25, regardless of the number of customers. This means that the fixed costs are constant and do not depend on the number of customers.
The unit cost per meal is $4.75.
Therefore, the cost of x meals would be $4.75 * x.
To break even, the total cost should be equal to the total revenue. The total cost is the sum of the fixed costs and the unit costs per meal, and the total revenue is the number of customers multiplied by the price per meal.
So, we can set up the equation:
$4.75 * x + $156.25 = $6 * x
Let's solve this equation to find the value of x:
$4.75 * x - $6 * x = $156.25
Combine like terms:
-$1.25 * x = $156.25
Divide both sides by -$1.25:
x = $156.25 / -$1.25
x ≈ -125
Therefore, based on this calculation, it appears that the owner cannot break even because the result is a negative number of customers (-125). This could imply that there is an error or unrealistic assumption in the given information.