Part 1:

Yummy Yummy

               Yummy Yummy is a restaurant located at AU that sales combo. The restaurant was created in 2004 by Yanny Huang with one mission: to provide a healthy meal for college students at a affordable price. The combo comes with one meat (chicken, beef, pork or fish), veggies (seasonal) and soup. This is designed to insure that students have enough to eat and be healthy at an affordable price. Yummy Yummy provide teas and water instead of soda. The students love the place so business has been profitable for the past few years. 

Part 2:

Fixed Costs: 

• Rent: $3,000 per month 
• Supplies: $2,000 per month 
• Payroll: $10, 000 per month 
• Business / government fees: $1,000 per month 
• Total Fixed Cost: $16,000 per month 

Variable Cost:

• $4.00 per meal 

The price 

• $10 per meal 
• R(q)= 10(q) 

Cost function 

• C(q)= 4(q)+ 16,000

Profit Function 

• P(q)= profit in dollars 
• P(q)= 10(q)- 4(q)+ 16,000= 6(q)+16,000 

Break- even point value 

• 10(q)= 4(q) +16,000 
• 0= 6(q)+16,000 
• -16,000= 6(q) 
• q= -2,666.666 
• q is approximately 2,667

Graph of cost function and the revenue

Interoperation:

• The Unit sales break-even analysis represents the fixed costs, total operating costs and sales revenues of Yummy Yummy. When the total operating cost and sales revenues lines touch each other, it means that the the break even point of Yummy Yummy. At that point, which is the operating cost of 28,000, 2,667 units are being sold and there will not be a loss in business. Starting from that point, the business will start earning profits. The break even is also the slope. 

Graph of Profit Function 

Interoperation: 

• The graph of profit function shows the total profit each until will produce. As shown by the graph, each meal will gain $6 profit. 

Part 3: 

Quantity produced each day
Q=2,667
N= 100
Marginal Cost

• The Marginal cost of producing x=100 unit would be $4 per unit 

Average Cost 

a(x)= C(q)/q = ((4*100)+16,000)/ 100= $164

1. The marginal revenue is greater than the marginal cost at q=2,667. The slope of the marginal revenue is steeper than the marginal cost. 
2. N= 100 is before the break even point, which means I will be losing money if I don't reach the break even point, which is at 2667. 
3. R(101)-R(100)= $10
1. C(101)- C(100)=$4 
2. In this case, if I increased by one unit, I will actually make $6 more in profit. 
4. My average cost ($164) is greater than my marginal cost ($4), thus an increase of production will decrease the average cost for the company. 
5. Decreasing the average cost would be better for the company because it will cost less to produce a meal. 

Part four: 

1. I think the company will do pretty well over the next five years. As shown by the graph, the slope of the sales are very steeper, thus the sales will only increased. 
2. I think the company will do well in the next 5 years. The student population will not decrease, in which means that there will always be business. As the graph also shown that the slope is steep and there will be a lot of room to grow.