How many cups of frozen yogurt would have to be sold in order for the firm to re

Question

How many cups of frozen yogurt would have to be sold in order for the firm to reach its projected revenues of $1.2 million?

NOTE: Each small cup of yogurt is sold for $3 and the cost of producing the frozen yogurt is $1.50 per cup. Admin. expenses, including Jen and Larry's salaries along with 2 other accountants were estimated to be $180,000 in 2013. Marketing expenses, advertising were projected to be $200,000 in 2013. Interest expenses were estimated at 15,000. The average tax rate is expected to be 25% of taxable income.

Equation: EBDAT= Revenues- Variable Costs- Cash fixed costs

Explanation / Answer

Cash fixed costs = $1.50/cup to make yogurt, admin expenses ($180K), marketing/advertising ($200K). Variable expense = .25(1.2x10^6) If we make "# of cups sold" into "C" the number of cups sold must allow for the following equation: Revenue desired = Gross earnings of sales - cost per cup - fixed expenses - taxes 1.2 x 10^6 = 3C - 1.5C - 3.8x10^5 - .25(1.2x10^6) Solve for "C" which is the minimum number of cups sold.

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

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