The Van Boheeman:

The Van Boheemen is a new burger joint in the central business district in
Wellington, New Zealand. The burger joint specialises in a range of value-for-
money burgers made from Ruby van Boheemen’s own secret recipes. Market
testing has generated a lot of favourable feedback. The take away shop operates
out of a ‘hole in the wall’ location and caters solely to the lunch time crowd.
Opening hours are only 11:30 am to 2:00 pm. Rent and labour costs are thus kept
to a bare minimum allowing Ruby to price her burgers at a very competitive $2
across her small product range. The fixed costs for the restaurant are $500 a day,
and variable costs are just $1 per burger.

Before Ruby opened her store she sat down and did a range of cost and revenue
calculations; she would now like you to double check her calculations. She has
the break-even level of production as being at 500 burgers a day.

3.3 : The Van Boheemen

Instructions: Complete the information based on the case study in Canvas.

Quantity Fixed Costs Variable Total Costs Total Profit/Loss

Sold ($) Costs ($) ($) Revenue ($)

500 0 -500
0
0 500

100
500 100 600 200 -400

200
500 200 700 400 -300

300
500 300 800 600 -200

400
500 400 900 800 -100

500
500 500 1000 1000 0

600 600 1100 1200 100

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 500
700 1200 1400 200
700
500

1. Calculate all missing values in the table to confirm that the break-even level of output is indeed
500 burgers.
Check
2. Construct a fully labelled break-even graph from the information given, to again confirm the
break-even level of output. (Try putting the chart on the table. If you have trouble with that, draw
the chart on paper and take a picture to either add to the page or submit with it.)

3. Identify on the break-even graph the margin of safety and profit at The Van Boheemen’s full
operating capacity – 700 burgers a day.
Fixed Variable Total Total
Quantit Profit/L
Costs Costs Costs Revenu
y Sold oss ($)
($) ($) ($) e
500 0 -500
0
0 500
700 1200 1400 200
700 500

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This study source was downloaded by 100000827503843 from CourseHero.com on 03-29-2022 02:54:18 GMT -05:00

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