Cereality is a cereal bar and caf designed to appeal to college students and others who...

 

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Cereality is a cereal bar and café designed to appeal to college students and others who love the idea of mixing Cocoa Puffs and Lucky Charms at almost any time of the day. Assume the following cost structure for Cereality: Cereal $ 3.75 0.75 Unit contribution margin $3.00 $6,000 Unit sales price Unit variable cost Monthly fixed costs Required: 1. How many customers must Cereality serve each month to break even? 2. How much total sales revenue must Cereality earn each month to break even? 3. If the owners want to earn an operating profit of $7,500 per month, how many customers must they serve? 4. If Cereality expects to serve 3,000 customers next month, what is the margin of safety in units? In total sales dollars? As a percentage of expected sales? Cereality is a cereal bar and café designed to appeal to college students and others who love the idea of mixing Cocoa Puffs and Lucky Charms at almost any time of the day. Assume the following cost structure for Cereality: Cereal $ 3.75 0.75 Unit contribution margin $3.00 $6,000 Unit sales price Unit variable cost Monthly fixed costs Required: 1. How many customers must Cereality serve each month to break even? 2. How much total sales revenue must Cereality earn each month to break even? 3. If the owners want to earn an operating profit of $7,500 per month, how many customers must they serve? 4. If Cereality expects to serve 3,000 customers next month, what is the margin of safety in units? In total sales dollars? As a percentage of expected sales?

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