Rio Coffee Shoppe sells two coffee drinks, a regular coffee and a latte. The two

Question

Rio Coffee Shoppe sells two coffee drinks, a regular coffee and a latte. The two drinks have the following prices and cost characteristics Sales price (per cup) Variable costs (per cup) Regular Coffee Latte 2.50 1.30 S 1.50 0.70 The monthly fixed costs at Rio are $6,720. Based on experience, the manager at Rio knows that the store sells 60 percent regular coffee and 40 percent lattes. on experigre, the manager at Rio knows that the store sells 60 percent regular cofe and 40 percent lates. Required: How many cups of regular coffee and lattes must Rio sell every month to break even? Break-even Sales in Units Regular coffee Lattes

Explanation / Answer

Regular coffee latte Sale price (per cup) 1.50 2.50 Variable costs (per cup) 0.70 1.30 Contribution margin (per cup) 0.80 1.20 Proportion in total sales 60% 40% Proportion Contribution per cup 0.48 0.48 Combined Contribution per cup 0.96 Break even sales in units = Fixed costs/ contribution per cup Combined Break even sales in units =6,720/0.96 = 7,000cups Break even sales in units Regular coffee (7000 *60%) 4,200 latte (7000 *40%) 2,800

Related Questions

Navigate

• Browse (All)
• Browse R
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.