Coffee 1.00 0.3 0.3 Candy 1.00 0.3 0.2 You estimate labor cost to be 5250.00 (5 booths with 2 people each). Even if nothing is sold, your labor cost will be $250.00, so you decide to consider this a fixed cost. Booth rental, which is a contractual cost at $ 50.00 for each booth per night, is also a fixed cost. a) What is the break- even sales revenue per evening performance? b) How much wine would you expect to sell each evening at the break- even point? Last year's manager, Jim Freeland, has advised you to be sure to add 10% of variable cost as a waste allowance for all categories, that is, for every unit of sale (of any item) an additional 10% of variable cost should be added. Thus, the actual variable cost of Soft drink will be 0.65 + 10% of 0.65 = 0.715 and similarly for the other items as well. Redo parts a and b with this new information. (a) Break-even volume, where total fixed cost = labor (at $250) + booth rental (at 5 x $50) = $500. Item Selling Price Variable cost V/P 1-V/P of Sales revenue (w) W* (1-V/P) Soft drink 1 0.65 0.65 0.35 0.25 0.0875 Wine 1.75 0.95 0.5429 0.4571 0.25 0.1143 Coffee 1 0.3 0.7 0.3 0.21 Candy 0.3 0.3 0.7 0.2 0.14 0.5518 Sum of the last column = 0.5518 Breakeven = TFC/wt contribution = 500/0.5518 = $906.15 No. of wine servings = 17ITisITss TT bbsThshah.25% TTss _ 906 13+0 25 units PhPPSTo wPhs 1 75 = 129.45 Item Selling Price Variable cost V/P 1-V/P of Sales revenue (w) W* (1-V/P) Soft drink 1 0.715 0.715 0.28 0.25 0.07125 Wine 1.75 1.045 0.5971 0.4029 0.25 0.1007 Coffee 0.33 0.33 0.67 0.3 0.201 Candy 1 0.33 0.33 0.67 0.2 0.134 Sum of the last column 0.5070 Breakeven = TFC/wt contribution = 500/0.507 = $986.19 No. of wine servings = 17VISITsx 17 bixThshah.25% sTTss _ 986 19:0 25 PhPPsTo wPhs units 1 75 = 140.9