If the fixed and variable costs total $100 and $5 respectively, and the break-even point is 20 meals, what is the single meal cost?

To determine the single meal cost, we first need to understand the components involved in reaching the break-even point. The break-even point occurs when total revenue equals total costs. In this case, fixed costs (which remain constant) and variable costs (which change with the number of meals) must be considered.

Given that the total fixed costs amount to $100 and the variable cost per meal is $5, the total cost to produce 20 meals can be calculated. The total cost consists of fixed costs plus the variable costs associated with producing those meals.

1. Fixed costs: $100

2. Variable costs for 20 meals: 20 meals * $5/meal = $100

Now, the total cost becomes:

Total cost = Fixed costs + Variable costs

Total cost = $100 + $100 = $200

To find the single meal cost, we divide the total cost by the number of meals at the break-even point:

Single meal cost = Total cost / Number of meals

Single meal cost = $200 / 20 meals = $10

This calculation confirms that the meal cost must be $10 to break even when producing and selling 20 meals. Thus, to cover both the total fixed and variable costs, the