MANAGERIAL ACCOUNTUNG Cost Volume Profit Analysis How many snow cones need to be sold for a SnowieTM snow cone cart to break even SnowieTM is a brand of flavored shaved ice that is sold in snow cones at a variety of events and locations across the United States Recently, a SnowieTM cart was spotted at the Kent Heritage Festival last summer During this festival, street vendors offer a variety of foods and drinks At the SnowieTM cart, festival goers can purchase a 20 ounce snow cone for $4 00 For the purpose of this hypothetical example, lets assume that the variable cost of each snow cone sold is $1 00 Also assume that the monthly fixed costs for this SnowieTM snow cone cart total $1,500 Questions What costs are likely to be included as variable costs for each snow cone What costs are likely to be included as the fixed costs of operating the SnowieTM snow cone cart If the owner has to hire a worker to attend the kiosk, is the cost of the worker a variable or fixed cost with respect to the number of snow cones sold Discuss Using the hypothetical example given, calculate the number of snow cones that the operator of the SnowieTM snow cone cart has to sell each month to break even Assume that the operator of the SnowieTM snow cone cart wants to make an operating profit of $1,200 per month (before taxes) How many snow cones must be sold to achieve this operating profit Now think about the break even and target profit quantities you just calculated Do you think these quantities are realistic Support your answer Think, for example, about number of days the cart is likely to be operated during a given month and the number of hours the cart is open for business

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on May 31, 2024

MANAGERIAL ACCOUNTUNG: Cost Volume Profit Analysis How many snow cones need to be sold for a SnowieTM snow cone cart to break even? SnowieTM is

MANAGERIAL ACCOUNTUNG: Cost Volume Profit Analysis

How many snow cones need to be sold for a SnowieTM snow cone cart to break even?

SnowieTM is a brand of flavored shaved ice that is sold in snow cones at a variety of events and locations across the United States. Recently, a SnowieTM cart was spotted at the Kent Heritage Festival last summer. During this festival, street vendors offer a variety of foods and drinks.

At the SnowieTM cart, festival goers can purchase a 20-ounce snow cone for $4.00. For the purpose of this hypothetical example, lets assume that the variable cost of each snow cone sold is $1.00. Also assume that the monthly fixed costs for this SnowieTM snow cone cart total $1,500.

Questions:

What costs are likely to be included as variable costs for each snow cone?
What costs are likely to be included as the fixed costs of operating the SnowieTM snow cone cart?
If the owner has to hire a worker to attend the kiosk, is the cost of the worker a variable or fixed

cost with respect to the number of snow cones sold? Discuss.
Using the hypothetical example given, calculate the number of snow cones that the operator of the

SnowieTM snow cone cart has to sell each month to break even.
Assume that the operator of the SnowieTM snow cone cart wants to make an operating profit of

$1,200 per month (before taxes). How many snow cones must be sold to achieve this operating

profit?
Now think about the break even and target profit quantities you just calculated. Do you think these

quantities are realistic? Support your answer. Think, for example, about number of days the cart is likely to be operated during a given month and the number of hours the cart is open for business.