Question 1 options:

In 2019, 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. Jen and Larry began producing small quantities of unique flavors and blends in limited editions. Revenues were $900,000 in 2019 and were estimated at $1.5 million in 2020.

Because 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 $150,000 in year 2020. 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 2020.

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 2019 and additional equipment needed to make the amount of yogurt forecasted to be sold in 2020 was purchased at the beginning of 2020. As a result, depreciation expenses were expected to be $50,000 in year 2020. Interest expenses were estimated at $15,000 in 2020. The average tax rate was expected to be 21 percent of taxable income.

1.How many cups of frozen yogurt would have to be sold in order for the firm to reach its projected revenues of $1.5 million? Don't use commas when typing in your answers. No decimal places

2. Calculate the dollar amount of EBDAT if Jen and Larrys Frozen Yogurt Company achieves the forecasted $1.5 million in sales for year 2020.

3.Jen and Larry believe that under a worst-case scenario yogurt revenues would be at $720,000. What would happen to the ventures EBDAT? For negative values use bracket.

4.Jen and Larry also believe that under very optimistic conditions that yogurt revenues could reach $1.8 million in year 2020. Show what would happen to the ventures EBDAT if this were to happen.

5.Calculate the EBDAT breakeven point for year 2020 in terms of survival revenues for Jen and Larrys Frozen Yogurt Company.

6. How many cups of frozen yogurt would have to be sold to reach EBDAT breakeven? Round it, no decimal places needed.

7. Show what would happen to the EBDAT breakeven in terms of survival revenues if the cost of producing a cup of yogurt increased to $1.60 but the selling price remained at $3.00 per cup. Round it, no decimal places needed.

8. How would the EBDAT breakeven change if production costs declined to $1.40 per cup when the yogurt selling price remained at $3.00 per cup? Round it, no decimal places needed.

9.

Show what would happen to the EBDAT breakeven point in terms of survival sales if an additional $30,000 was spent on advertising in year 2020 while the other fixed costs remained the same, production costs remained at $1.50 per cup, and the selling price at $3.00 per cup.

10. Now assume that due to competition, Jen and Larry must sell their Frozen Yogurt for $2.80 per cup in year 2020 and everything else is expected to remain the same as projected in the initial discussion of Jen and Larrys venture. Calculate the EBDAT breakeven point in terms of survival breakeven revenues. Round it, no decimal places needed.

1.