A friend of yours has approached you about starting a hot dog stand at the courthouse. She has collected the following information and would like you to help her evaluate the business.

The sale price will be 3.50 for a hot dog, potato chips and a drink. The projected cost per sale is 1.35. Condiments are projected to be $ .35 per sale. The hot dog cart will be leased for a 12 month period for $ 425 per month. Liability insurance will be $ 1,200 per year. The owner wants to earn $ 20,000 per year and assumes a tax rate of 20%. An annual profit is projected to be $ 10,000.

Complete the Break Even analysis and answer the following questions.

1. What are the total variable costs per unit?

2. What is the contribution margin ratio?

3. What are the total fixed costs?

4. What are the total expenses per the income statement?

5. How many units must be sold per year?

6. If the sales price changes to $ 4.00 and the owner salary changes to $ 15,000, how many units must be sold?

7. Using Word, summarize your findings and make a recommendation to your friend.