Mr Ha is interested in setting up a coffee shop in Canberra, Australia. After consulting with...
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Mr Ha is interested in setting up a coffee shop in Canberra, Australia. After consulting with his brother who owns a café in other town of the territory, he has decided to commence the business in March 2023. The following is relevant information for the business he plans. Initial investment required (coffee stand; $9,000, Coffee machine: 3,000 The machine can be functional for 5 years or a total capacity to produce 50,000 cups of coffee. Rental expense costs the shop $1,000/month for 5 years. The planed price for the coffee is $4/cup and a total variable cost $1.5 every cup. Required a) Define the meaning of fixed costs and variable costs of a company. (6 marks) (10 marks) b) Calculate the total fixed costs every month. c) Calculate the unit contribution margin and explain what the meaning of this information in business is. (10 marks) d) How many cups of coffee need to be sold to achieve a break-even point. (10 marks) Mr Ha is interested in setting up a coffee shop in Canberra, Australia. After consulting with his brother who owns a café in other town of the territory, he has decided to commence the business in March 2023. The following is relevant information for the business he plans. Initial investment required (coffee stand; $9,000, Coffee machine: 3,000 The machine can be functional for 5 years or a total capacity to produce 50,000 cups of coffee. Rental expense costs the shop $1,000/month for 5 years. The planed price for the coffee is $4/cup and a total variable cost $1.5 every cup. Required a) Define the meaning of fixed costs and variable costs of a company. (6 marks) (10 marks) b) Calculate the total fixed costs every month. c) Calculate the unit contribution margin and explain what the meaning of this information in business is. (10 marks) d) How many cups of coffee need to be sold to achieve a break-even point. (10 marks)
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a Fixed costs refer to expenses that do not change with the level of production or sales volume These costs are incurred regardless of the level of ac... View the full answer
Related Book For
South-Western Federal Taxation 2020 Comprehensive
ISBN: 9780357109144
43rd Edition
Authors: David M. Maloney, William A. Raabe, James C. Young, Annette Nellen, William H. Hoffman
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