Juice It Up is a healthy smoothie bar operating in conjunction with a local gym. The average price of a smoothie is $5.75; the average cost of ingredients is $2.00 per smoothie and it costs $0.50 per smoothie to run the equipment. The bar is open every evening with staff consisting of a smoothie-maker and one or two servers. The fixed costs (salaries, rent, utilities, etc.) total $250,000 per year.

a) The owner wants to know how many smoothies the bar must sell during the year to start making a profit. What is the revenue at the breakeven quantity found?

b) If Juice It Up sold 90,000 smoothies a year, would it make a profit? Explain

c) The owner thinks that an annual profit of $50,000 is reasonable. How many smoothies should the bar sell to make $50,000 profit?

d)  An available option is to keep the bar open later on weekends. The attraction would be a discount of $1.00 off the regular smoothie price. The extra salaries of servers and smoothie-maker for the whole year are estimated to be $30,000. How many extra smoothies must the bar sell in order to break even in this option?

Answer rating: 100% (QA)

Lets break down each part of the question a To find the breakeven point we need to determine how many smoothies the bar must sell to cover its fixed a... View the full answer