A local fast food outlet is planning to open a branch along the highway. The outlet will specialize in selling...

A local fast food outlet is planning to open a branch along the highway. The outlet will specialize in selling only chicken. It has been proposed that only Half chicken and Quarter chicken be sold and the following details have been supplied to you for your consideration.

Food cost per cover:

                        Half Chicken               $ 3.25

                        Quarter Chicken          $ 1.75

Expected sales Mix:

                        Half Chicken               40%

                        Quarter Chicken          60%

When operating at full capacity, the outlet can produce and sell up to 15 000 covers per month.  Monthly fixed costs are expected to be $ 50 000. Management has targeted a Net Profit of 15%. The outlet is expected to operate at 80%. In addition Management has informed you that the pricing policy should be such that Half chickens must sell at a price 70% to 75% higher than that of Quarter chickens.

Required:

Calculate the expected selling prices for both the Quarter and Half chicken.