In 2008, Jennifer (Jen) Liu and Larry Mestas founded Jen and Larrys Frozen Yogurt Company, which was based on the idea of applying the microbrew or microbatch strategy to the production and sale of frozen yogurt. [The involved reader may recall that we first introduced this yogurt venture in the problems section at the end of Chapter 2.] Jen and Larry began producing small quantities of unique flavors and blends in limited editions. Revenues were $600,000 in 2008 and were estimated at $1.2 million in 2009.

Since Jen and Larry were selling premium frozen yogurt containing premium ingredients, each small cup of yogurt sold for $3 and the cost of producing the frozen yogurt averaged $1.50 per cup. Administrative expenses, including Brandies salary and expenses for an accountant and two other administrative staff, were estimated at $180,000 in year 2009. Marketing expenses, largely in the form of behind-the-counter workers, in-store posters, and advertising in local newspapers, were projected to be $200,000 in year 2009.

An investment in bricks and mortar was necessary to make and sell the yogurt. Initial specialty equipment and the renovation of an old warehouse building in Lower Downtown (known as LoDo) occurred at the beginning of 2008 and additional equipment needed to make the amount of yogurt forecasted to be sold in year 2009 was purchased at the beginning of 2009. As a result, depreciation expenses were expected to be $50,000 in year 2009. Interest expenses were estimated at $15,000 in 2009. The average tax rate was expected to be 25 percent of taxable income.

G. Calculate the NOPAT breakeven point for year 2009 in terms of NOPAT breakeven revenues for Jen and Larrys venture. How many cups of frozen yogurt would have to be sold to reach NOPAT breakeven?