1. . In order to do this, you will need to set a sales price as well as classify the above costs into fixed or variable.

You might want to use a table similar to the following:

	Small	Large
Sales Price
Variable Cost
Contribution Margin
Contribution Margin Ratio

2. Using the above information, determine the number of milkshakes you will need to sell in order to break even if you only sell small milkshakes. Then determine the number of milkshakes you will need to sell to break even if you only sell large milkshakes.

3. Prepare an income statement at your break even point for the sales of only large milkshakes.

The case assumes students will open a milkshake shack on the beach of a resort on the "big Island" of Hawaii. I have studied existing restaurants, read industry reports, and have done some research on expected minimum costs to be incurred in operating the business. A unique feature of my milkshakes is that I will serve them with flavored straws that match the flavor of the chosen milkshakes by customers. My research embeds the following assumptions Sales prices of milkshakes (S7.00 for small, and S10.00 for large) Cost of materials needed to make milkshakes DIRECT MATERIAL INGREDIENTS Whole Milk (S15 for a 5 gallon-740 oz.) Cream (S20 for 1 gallon-128 oz.) Sugar ($10 for a 15 lb. bag-30 cups) Premium Vanilla Ice Cream ($24 for 600 oz.) Flavorings Flavored specialty straws Cups (500 8 oz. cups a cost of $200) Cups (500 12 oz. cups a a cost of $250 Small (8 oz. size (need 2 oz. of milk) (need 2 oz. of cream) (need 2 cup of sugar) (need 6 oz.) 25 per shake 75 per straw Large (12 oz. size) (need 3 oz. of milk) (need 3 oz. of cream) (need 4 cup of sugar) (need 9 oz. of cream) 40 per shake 75 per straw The case assumes students will open a milkshake shack on the beach of a resort on the "big Island" of Hawaii. I have studied existing restaurants, read industry reports, and have done some research on expected minimum costs to be incurred in operating the business. A unique feature of my milkshakes is that I will serve them with flavored straws that match the flavor of the chosen milkshakes by customers. My research embeds the following assumptions Sales prices of milkshakes (S7.00 for small, and S10.00 for large) Cost of materials needed to make milkshakes DIRECT MATERIAL INGREDIENTS Whole Milk (S15 for a 5 gallon-740 oz.) Cream (S20 for 1 gallon-128 oz.) Sugar ($10 for a 15 lb. bag-30 cups) Premium Vanilla Ice Cream ($24 for 600 oz.) Flavorings Flavored specialty straws Cups (500 8 oz. cups a cost of $200) Cups (500 12 oz. cups a a cost of $250 Small (8 oz. size (need 2 oz. of milk) (need 2 oz. of cream) (need 2 cup of sugar) (need 6 oz.) 25 per shake 75 per straw Large (12 oz. size) (need 3 oz. of milk) (need 3 oz. of cream) (need 4 cup of sugar) (need 9 oz. of cream) 40 per shake 75 per straw