Question

The Coffee Express has computed its fixed costs to be $.48for every cup of coffee it sells given annual sales of 145,000 cups. The sales price is $1.29 per cup while the variable cost per cup is $.07. How many cups of coffee must it sell to break even on a cash basis? 57,049 46,472 23,910 67,630 61,616

Answer 1

Answer:

57,049 cups

Explanation:

The formula to compute the break-even point in units is shown below:

Break-even point in units  = (Fixed cost) ÷ (contribution per cup)

where,

Fixed cost = Number of cups × fixed cost per unit

                 = 145,000 cups × $0.48

                = $69,600

Now the contribution per unit equals to

= Selling price per cup - variable cost per cup

= $1.29 - $0.07

= $1.22

Now put these values to the above formula  

So, the value would equal to

= $69,600 ÷ $1.22

= 57,049 cups