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QUESTION TWO INFORMATION: Bean Coffee, a local coffee shop, is considering expanding its operations by opening a new branch. The owners want to ensure that
QUESTION TWO
INFORMATION:
Bean Coffee, a local coffee shop, is considering expanding its operations by opening a new branch. The owners want to
ensure that the new branch will be profitable and are seeking advice on conducting a breakeven analysis.
Bean Coffee estimates the following for the new branch:
Fixed Costs: R per month
Variable Costs per Coffee Sold: R
Selling Price per Coffee: R
The owners anticipate selling an average of coffees per month at the new branch.
REQUIRED:
Calculate the breakeven point in terms of the number of coffees Bean Coffee needs to sell each month to
cover its fixed and variable costs.
Discuss what does the breakeven point signify for Bean Coffee?
If Bean Coffee wants to make a monthly profit of R how many coffees do they need to sell?
Discuss the importance of breakeven analysis for businesses like Bean Coffee.
Suggest some strategies Bean Coffee can implement to lower its breakeven point.
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