Rajoo started operating a small coffee kiosk offering standard coffee (with or without milk) beside the Raffles Place MRT station on 1 November 20X8. The following are the costs compiled for the month of November 20X8. However, sales of coffee in December was only half of that of November. Rajoo was puzzled that he only made a profit of $80 in December. Based on the profit per cup of coffee, he expects to made a profit of $930 ($0.93 x 1,000). Ignore taxation. (a) From your understanding of cost behaviour, discuss and describe the reason why Rajoo made only $80 in December. Show the relevant computations to support your answers. (11 marks)

(b) Based on the costs given, compute the break-even sales in units and in $. (4 marks)

(c) Compute the margin of safety in $ and margin of safety in percentage for November. (3 marks)

(d) Rajoo is planning to quit his job to manage the kiosk full time provided it can make a profit of $5,000 per month. Compute the sales in units and $ per month the kiosk must attain in order to achieve this profit. (4 marks)

November 20X8 2,000 Number of cups sold Cost of cups Cost of coffee Cost of milk and sugar Rental of coffee stand Rental of coffee machine Salary of worker Total cost $1,000 $400 $40 $500 $100 $1,100 $3,140 Cost per cup of coffee Average selling price per cup of coffee Profit per cup of coffee $1.57 $2.50 $0.93