Coffee Klatch is an espresso stand in a downtown office building The average

# Coffee klatch is an espresso stand in a downtown

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Coffee Klatch is an espresso stand in a downtown office building. The average selling price of a cup of coffee is \$1.49 and the average variable expense per cup is \$0.36. The average fixed expense per month is \$1,300. An average of 2,100 cups are sold each month. What is the break-even sales in units? a. 872 cupsb. 3,611 cupsc. 1,200 cupsd. 1,150 cups
5-48 Coffee Klatch is an espresso stand in a downtown office building. The average selling price of a cup of coffee is \$1.49 and the average variable expense per cup is \$0.36. The average fixed expense per month is \$1,300. An average of 2,100 cups are sold each month. What is the break-even sales in units? Quick Check
5-50Target Profit Analysis in Unit SalesSuppose RBC’s management wants to know how many bikes must be sold to earn a target profit of \$100,000.
5-51 Target Profit Analysis in Unit Sales The “formula”: Target profit + Fixed expenses CM per unit = Unit sales to attain the target profit
5-52 Target Profit Analysis in Unit Sales Suppose Racing Bicycle Company wants to know how many bikes must be sold to earn a profit of \$100,000. Target profit + Fixed expenses CM per unit = Unit sales to attain the target profit Unit sales = 900 \$100,000 + \$80,000 \$200 Unit sales =
5-53 Target Profit Analysis – in \$\$ Sales Profit = CM ratio × Sales – Fixed expenses Our goal is to solve for the unknown “Sales,” which represents the dollar amount of sales that must be sold to attain the target profit. Suppose RBC management wants to know the sales volume that must be generated to earn a target profit of \$100,000. \$100,000 = 40% × Sales – \$80,000 40% × Sales = \$100,000 + \$80,000 Sales = (\$100,000 + \$80,000) ÷ 40% Sales = \$450,000
5-54 Target Profit Analysis – in \$\$ sales We can calculate the dollar sales needed to attain a target profit (net operating profit) of \$100,000 at Racing Bicycle. Target profit + Fixed expenses CM ratio = Dollar sales to attain the target profit Dollar sales = \$450,000 \$100,000 + \$80,000 40% Dollar sales =
5-55 Quick Check Coffee Klatch is an espresso stand in a downtown office building. The average selling price of a cup of coffee is \$1.49 and the average variable expense per cup is \$0.36. The average fixed expense per month is \$1,300. How many cups of coffee would have to be sold to attain target profits of \$2,500 per month? a. 3,363 cups b. 2,212 cups c. 1,150 cups d. 4,200 cups
5-56 Coffee Klatch is an espresso stand in a downtown office building. The average selling price of a cup of coffee is \$1.49 and the average variable expense per cup is \$0.36. The average fixed expense per month is \$1,300. How many cups of coffee would have to be sold to attain target profits of \$2,500 per month.