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Transcription of this question: 2.Café Lucchini (CL)Fabi Lucchini will open the only café, selling hot and cold drinks only, in her small village. Theeconomy is weak so the local government will pay 50% of the rent for the premises in which CLwill operate.Fabi has forecasted the following figures for the first six months of operation, beginning on1 July 2016:Rent per monthGovernment payment towardrent per monthSalary per monthElectricity (payable everysecond monthstarting in August)Cleaning supplies per monthSales revenue per monthPurchases per month$2000$1000$1600$200$100JulyAugustSeptemberOctoberNovemberDecember40% of sales$4000$4000$3500$3500$4000$4500An option is to install cooking facilities and serve meals to increase CL’s sales revenue. Fabiestimates that she could sell 40 meals per day at an average variable cost of $5 and at an averagesales price of $10. Serving meals would increase her fixed costs by $3000 per month.(a)(b)(c)Define the term fixed cost.Calculate the break-even quantity of meals that CL must sell to pay for the increase infixed costs of $3000 to provide these meals (show a’/ your working).Using the information in the table only, prepare a monthly cash flow forecast, for CL,for the first six months of operation.[2][2]

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