Charlie’s Hotdog Stand
Charlie’s Hotdog Stand sells hotdogs for $2.50 each. The variable costs per hotdog are $.50. Charlie’s fixed costs are currently $800 per month. Charlie is considering expanding his business to three hotdog stands which will increase fixed costs per month by $1200.

-If Charlie does expand his business to three stands,how many hotdogs will need to be sold per month in order to earn a target profit of $5000?

Question

Charlie’s Hotdog Stand
Charlie’s Hotdog Stand sells hotdogs for $2.50 each. The variable costs per hotdog are $.50. Charlie’s fixed costs are currently $800 per month. Charlie is considering expanding his business to three hotdog stands which will increase fixed costs per month by $1200.

-If Charlie does expand his business to three stands,how many hotdogs will need to be sold per month in order to earn a target profit of $5000?

Quizplus · Accepted Answer

To calculate the number of hotdogs Charlie needs to sell to earn a target profit of $5000 after expanding to three stands, first, calculate the total fixed costs after expansion: $800 (current fixed costs) + $1200 (additional fixed costs) = $2000. The contribution margin per hotdog is the selling price minus the variable cost, which is $2.50 - $0.50 = $2. The total amount needed to cover both the new fixed costs and the target profit is $2000 (fixed costs) + $5000 (target profit) = $7000. To find the number of hotdogs needed to be sold, divide the total amount needed by the contribution margin per hotdog: $7000 / $2 = 3500 hotdogs.

Charlie’s Hotdog Stand Charlie’s Hotdog Stand Sells Hotdogs for $2.50 Each. the Variable