
break even analysis
A manager has two options for implementing salads into his restaurant.
Option 1 has a fixed cost of 12000 and a variable cost of 1.5X
Option 2 has a fixed cost of 2400 and a variable cost of 3X
The break even quantity is: (12000  2400)/(3  1.5) = 6,400 salads
Now for the question:
Come up with fixed and variable cost values for a new option where:
i) The new option is preferable between quantities 3000 and 7000
ii) The new option is always preferable
iii) The new option is never preferable
I'm not sure how to start the problem, for part i) it seems like there could be an endless number of correct answers because neither variable is stated.
Please help. Thanks!