During the spring semester an enterprising junior decided to operate a Larry\'s

Question

During the spring semester an enterprising junior decided to operate a Larry's Lemonade stand at the beach rather than work at his normal summer job. This franchise offers a single product that is available in a single size. The variable cost per cup is estimated to be $.20. The fixed cost (fees, permits, rental of concession stand, etc.) are estimated to be $4000.

What is the unit cost of a cup of lemonade if he anticipates selling 5000 cups during the course of the summer?

Find the unit cost of a cup of lemonade.

Explanation / Answer

Fixed cost per cup is 4000/5000= .80 So if variable cost is .20 we have .20+.80= 1.00 unit cost

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