Use the following information to answer the questions.
Problem: A friend of yours is trying to determine whether to open a sandwich stand at the local mall based on the following data. She expects total fixed costs per year of $24,000, a sale price per sandwich of $3.00, and variable costs per sandwich of $1.80.
Q1. The break-even level of output for this endeavor is:
(A) 12,000.
(B) 16,000.
(C) 20,000.
(D) 24,000.
Q2. What percentage of every sales dollar will contribute to covering fixed costs?
(A) 30%
(B) 40%
(C) 50%
(D) 60%
Q3. The break-even point in sales dollars is:
(A) $60,000.
(B) $54,000.
(C) $46,000.
(D) $30,000.
Q4. If your friend expects to sell no more than 15,000 sandwiches per year, then:
(A) she should not undertake the endeavor given the current cost/volume/profit expectations.
(B) she should undertake the endeavor given the current cost/volume/profit expectations.
(C) she should assess the effect of lowering the sales price of sandwiches if she wishes to pursue this endeavor.
(D) None of the above.