= Break-Even Analysis There are several formulas that will be helpful for this assignment: Break-Even Units = Fixed Costs/(Price - Unit Variable Cost) Break-Even Price = Variable Cost + (Fixed Costs / Projected Units) Break-Even Revenues = Break-Even Units x Price Target Profit Break-Even Units = (Fixed Costs + Target Profit) / (Price - Unit Variable Cost) Note that you can't sell a fraction of a unit (e.g., a half a cup of coffee). So, if you enter a number of units with a decimal, the computer will round it to a whole number. QUESTION 2 Calculate the break-even units if fixed costs are $11,000 and coffee has a price and cost of $3.40 and $0.40 per cup, respectively. b units What would be the break-even units if the price was lowered to $2.70? 0 units What would be the break-even revenues at a price of $2.70? $ o What would be the break-even units if the cost of coffee per cup increased by $0.10 to $0.50 and the cafe decided to pass on the $0.10 cost increase to customers, raising the price per cup to $2.80? units 0 Break-Even Analysis There are several formulas that will be helpful for this assignment: Break-Even Units = Fixed Costs/(Price - Unit Variable Cost) Break-Even Price = Variable Cost + (Fixed Costs / Projected Units) Break-Even Revenues = Break-Even Units x Price Target Profit Break-Even Units = (Fixed Costs + Target Profit) / (Price - Unit Variable Cost) Note that you can't sell a fraction of a unit (e.g., a half a cup of coffee). So, if you enter a number of units with a decimal, the computer will round it to a whole number. QUESTION 3 Of course, most businesses would like to do more than break even. They would like to make a profit instead. Calculate the target profit breakeven if the owner would like to make $1,600 of profit each week, given that fixed costs are $11,000 and the price and cost of a cup of coffee are $2.70 and $0.50, respectively. units 0 In the early weeks of the cafe's existence, the owner expected to lose money but didn't want lose more than $3,000 each week. What quantity of cups would need to be sold for that level of a loss? If the value you compute is not a whole number, round up to the nearest whole number. units 0 Break-Even Analysis There are several formulas that will be helpful for this assignment: Break-Even Units = Fixed Costs/(Price - Unit Variable Cost) Break-Even Price = Variable Cost + (Fixed Costs / Projected Units) Break-Even Revenues = Break-Even Units x Price Target Profit Break-Even Units = (Fixed Costs + Target Profit) / (Price - Unit Variable Cost) Note that you can't sell a fraction of a unit (e.g., a half a cup of coffee). So, if you enter a number of units with a decimal, the computer will round it to a whole number. Submit Assignment QUESTION 4 The cafe manager thinks that break-even calculations could help with their pricing decision. What would be the break-even price for a volume of 3,900 cups of coffee, if fixed costs are $12,000 and variable costs are $0.40. $ 0.00 If the manager knows that, with current staffing, the maximum number of cups the cafe could produce was 5,000, what would be the break-even price at that level? $ 0.00 If the cafe decided to price at the break-even price for their maximum capacity, which of the following statements would be true. Statement Truthfulness If the manager increased the price and operated at maximum capacity, the cafe would be profitable. (select option) (select option) True False If the cost of coffee increased during the week, but the price remained the same, the cafe would still break even. If the cafe ran a promotion of $1 off for all college students and 10% of their customers were college students, the cafe would still break even. (select option) If the espresso machine broke during the Tuesday morning rush and the cafe was unable to serve coffee for 3 hours, the cafe would still break even. (select option)
