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Huntington Products, Inc.
Author(s):
Young, David W.
Functional Area(s):
   Management Accounting
Setting(s):
   For Profit
Difficulty Level: Beginner
Pages: 1
Teaching Note: Available. 
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First Page and the Assignment Questions:
The cafeteria at Huntington Products, Inc. sells meals to the company's employees. Its goal is to break even. Information for the past three months of operations is in Exhibit 1. In March, the cafeteria expects to serve 10,000 meals.

Assignment

1.    Develop a cost equation for the cafeteria that can be used to predict total monthly costs.

2.    During February, how much would the price per meal need to be for the cafeteria to break even?

3.    If the cafeteria price is $10.10 per meal, how many meals must it sell to breakeven.


HUNTINGTON PRODUCTS
Exhibit 1. Meal-Related Data

                                                                              December    January    February

Number of meals served                                        3,000         5,000         8,000

Cost of food sold                                                $18,000        $30,000    $48,000
Staff salaries and fringe benefits                        14,500          16,500      19,500
Rent and depreciation                                            4,000           4,000         4,000
Utilities and other                                                     2,100         3,300         5,100
    Total                                                                    $38,600    $53,800     $76,600