Cafe Company employs Other costs are as Chile Company, a local coffee shop that sells each cup of coffee for 58, five employees that are paid $700 per month each plus a sales comission of S0.25 per cup of coffee sold. One of the five employees month. Cafe believes it will sell 3,000 cups of coffee each month. sones as the manager and also receives a $200 manager bonus pay each follows: $1,000 per month $900 per month $0.20 per coffee $0.60 per coffee S160 per month plus $0.14 per coffee $0.05 per coffee $60 per month Coffee Grounds $2.00 per cup $1.76 per cup Rent Advertising Coffee Cup Cup Holder Utilities Napkins Magazines Coffee Water 1. What are the total variable costs? 2. What are the total fixed costs? 311 Cafe Company (continued) 3. Prepare a detailed CVP Income Statement for Caf 312 Cafe Company continued) Compute the breakeven point in units, Compute the breakeven point in sales dollars. 6. What is the margin of safety ratio? What does this mean for Cafe Cumpany? 7. If Cate Company wants to achieve a target net income of $9.549, how many cups of coffee should it sell in one month? 313 Caf Company What if Scenario 1 Caf is considering cutting its advertising budget to SO to save money Also Caf will fire 2 of its non-manager employees. Because of the of advertising coffee sales will decrease to 70% of its current level (3,000 cups per month). Is this a good idea? 314 Caf Company What if Scenario 2 wantage of radio ads. Because of the increased advertising coffee considering increasing its advertising budget to $1.200 to take sales will increase to 130% of its current level (3.000 cups per month). cule is Is this a good idea? 315