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Calculating costs for University Cafe

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The University Café has seen sales drop since classes have been scheduled during the noon hour and only 5 minutes between classes. Students don't have enough time to choose from the buffet line. The cafeteria manager has considered offering boxed lunches that would come with a sandwich, chips, a cookie and soft drink. Students could quickly choose these for a set price.

To set up this new system, the cafeteria manager would have to buy some new equipment costing $1000, a one-time, fixed cost. He has estimated his variable cost per box to be $1. He would like to sell the boxed lunches for $5.

The cafeteria is open 4 days per week in a 10 week quarter. If 25 lunches are sold per day, how much profit would the cafeteria realize at the end of the quarter?

A. $1000
B. $5000
C. $3000
D. Impossible to tell with the given information

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Solution Summary

This solution provides assistance with the multiple choice question and provides an answer with explanation.

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C. 3000

This is derived by determining the profit from sales minus ...

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