Assume the sales mix given in the problem. What is The Judges Bests break-even point in terms of the number of cups of coffee sold during the year?
Material Costs The Judge's Best uses a specialty brand of Yirgacheffe! coffee beans costing $6.60 per pound. Each pound of coffee beans produces 256 ounces of coffee. Coffee is sold in three sizes: a small cup holding 8 ounces, a medium cup holding 10 ounces hnd large cup holding 12 ounces The cups needed to serve the coffee cost $.06 for the small cup, $.07 for the medium cup, and $.08 for the large cup. Lids cost $.04 per cup and are the same regardless of the cup size. Sleeves cost an additional S.05 per cup. On average, sugar and cream cost $.03 per cup for small cups, S.04 for medium cups, and S.05 for large cups. Labor Costs The Judge's Best is open 12 hours each day, 7 days a week (365 days per year), and is staffed with three employees during the morning shift (7:00 a.m.-11:00 a m.), two employees from 11:00 a.m. until 3:00 p.m., and three employees from 3:00 p.m. to 7:00 p.m. Labor is fixed cost, because the employees are paid regardless of whether coffee is sold. Samson worked 60 hours each week, on average, and was paid a salary of $42,000 during the first year ofoperations. Fringe benefits for Samson, including health insurance and payroll taxes, accounted for an additional $10,000 of costs for the company. Part-time employees worked an average of24 hours each week and were paid $15.00 per hour. Payroll taxes and other costs $1.00 per hour for part-time employees. As shown in the following table, part-time employees worked from 656 hours to 727 hours each month: Month Part-time Employee Month Part-time Employee Labor Hours Labor Hours 722 July 727 January August February 656 727 March 727 September 705 April 705 October 727 November May 727 705 December 727 June 705 Material Costs The Judge's Best uses a specialty brand of Yirgacheffe! coffee beans costing $6.60 per pound. Each pound of coffee beans produces 256 ounces of coffee. Coffee is sold in three sizes: a small cup holding 8 ounces, a medium cup holding 10 ounces hnd large cup holding 12 ounces The cups needed to serve the coffee cost $.06 for the small cup, $.07 for the medium cup, and $.08 for the large cup. Lids cost $.04 per cup and are the same regardless of the cup size. Sleeves cost an additional S.05 per cup. On average, sugar and cream cost $.03 per cup for small cups, S.04 for medium cups, and S.05 for large cups. Labor Costs The Judge's Best is open 12 hours each day, 7 days a week (365 days per year), and is staffed with three employees during the morning shift (7:00 a.m.-11:00 a m.), two employees from 11:00 a.m. until 3:00 p.m., and three employees from 3:00 p.m. to 7:00 p.m. Labor is fixed cost, because the employees are paid regardless of whether coffee is sold. Samson worked 60 hours each week, on average, and was paid a salary of $42,000 during the first year ofoperations. Fringe benefits for Samson, including health insurance and payroll taxes, accounted for an additional $10,000 of costs for the company. Part-time employees worked an average of24 hours each week and were paid $15.00 per hour. Payroll taxes and other costs $1.00 per hour for part-time employees. As shown in the following table, part-time employees worked from 656 hours to 727 hours each month: Month Part-time Employee Month Part-time Employee Labor Hours Labor Hours 722 July 727 January August February 656 727 March 727 September 705 April 705 October 727 November May 727 705 December 727 June 705
