Question
answer the following questions. alil calculations must appear on the answer sheet. question 1: cvp analysis [9 marks] (clo 3) fresh coffee shop sells freshly
answer the following questions. alil calculations must appear on the answer sheet. question 1: cvp analysis [9 marks] (clo 3) fresh coffee shop sells freshly brewed coffee at an average price of $4 per cup. fresh coffee shop has fixed costs of $100,000 per year and the variable cost per cup of coffee is $1.50. required: 1. compute the breakeven sales in dollars. (1 mark) 2. if the company currently sells 50,000 cups per year, compute the margin of safety m dollars. (2 marks) 3. if sales increase by $30,000, by how much will the operating income increase? (2 mark) 4. the company is intending to shift to better quality coffee that will sell at $5 per cup and has a variable cost of $2 per cup. the company will need to hire an additional professional barista with a salary of $20,000 per year. do you suggest the changes to be made? compare the net operating income, breakeven point and margin of safety of the current and proposed plan to support your decision. (4 marks
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