Evan the Entrepreneur loves cold brew. So he’s opening an independent coffee shop on King Street selling only one variety of cold brew because he thinks it’s the best idea ever. He’s provided the following information (and these numbers are surprisingly realistic given rents and other costs on King Street):

Selling Price per cup: $5.00

Variable Cost per cup: $1.37

Fixed costs per month: $56,900

1. What is their contribution margin per cup?

2. How many cups do they need to sell each month to break even? (Round your answer up to the next unit, e.g. 7,655.211 would round up to 7,656.)

3. They think they can sell an average of 30 cups of cold brew per hour. They will be open for 12 hours per day, every day (30 days per month). So they think they can sell 10,800 cups per

month. Calculate total cost per cup at a rate of 10,800 cups per month. Round your answer to the nearest dollar, two decimal places, expressed in dollars and cents. (Hint: If 10,800 cups per month is less than break even, then this could be greater than the selling price.)

4.Evan the Entrepreneur needs $5,000 per month to meet basic personal living expenses, which will come from the business profit. How many cups of coffee will they need to sell each month to meet this target?

Answer rating: 100% (QA)

1 Contribution margin per cup selling price variable cost per cup 500137 363 2 Breakeven ... View the full answer