Suppose you have decided to start a small business selling snacks from vending machines. You have secured a location for one candy vending machine in a local bookstore. Rental for the space will cost $200 per month.

Vending machines can be purchased at wholesale clubs such as Sam's Club and Costco. You can also purchase the snacks to stock the machines in bulk there.

Step 1) Either visit a local warehouse club or review its website to determine the inital cost to purchase a snack vending machine.

The selected machine has a cost (including shipping) of $500.

Step 2) This item should be your favorite candy bar. What is your cost per bar? What type of snack bar will you choose?

Step 3) How much will you sell each candy bar for?

Step 4) How many candy bars must be sold to cover the machine cost? ( must be stated in whole units)

Step 5) Once the cost of the machine is covered, assume your only monthly fixed cost is $200/month as a rental charge.

How many candy bars must be sold to cover the monthly fixed cost? ( must be stated in whole units )

What would be the total sales dollars?

Step 6) Skip

Step 7) For this step, add another product of your choice such as gum, chips, skittles, etc.

Then use the candy bar from step 2 and this product when considering the Break-Even points.

Second item is:

Cost of this item is:

Selling price of this item is:

Contribution Margin for this item is:

If the company's sales mix is 70% candy bars/ 30% second item, what is the break-even point in units of each item to cover the $500 machine cost?

If the company's slaes mix is 70% candy bars/30% second item, what is the break-even point in units of each item to cover the $200 machine cost?