Question
Evan the Entrepreneur loves cold brew. So hes opening an independent coffee shop on King Street selling only one variety of cold brew, because he
Evan the Entrepreneur loves cold brew. So hes opening an independent coffee shop on King Street
selling only one variety of cold brew, because he thinks its the best idea ever. Hes provided the
following information (and these numbers are surprisingly realistic given rents and other costs on King
Street):
selling Price per cup: $5.00 Variable Cost per cup: $1.37 Fixed Costs per month: $56,900
1. What is their contribution margin per cup?
2.How many cups do they need to sell each month to break even? (Round your answer up to the
next unit, e.g. 7,655.211 would round up to 7,656.)
3.They think they can sell an average of 30 cups of cold brew per hour. They will be open for 12
hours per day, every day (30 days per month). So they think they can sell 10,800 cups per
month. Calculate total cost per cup at a rate of 10,800 cups per month. Round your answer to
the nearest dollar, two decimal places, expressed in dollars and cents. (Hint: If 10,800 cups per
month is less than break even, then this could be greater than the selling price.)
4.Evan the Entrepreneur needs $5,000 per month to meet basic personal living expenses, which
will come from the business profit. How many cups of coffee will they need to sell each month
to meet this target?
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