Question

In: Accounting

The Barista brothers is a small company that sells coffee from mobile barista bars at events....

The Barista brothers is a small company that sells coffee from mobile barista bars at events. The brothers are discussing whether or not to sell coffee at the Saxion day of open doors. If they decide to go to the event, they need to rent a mobile barista bar at €250 a day. The labour rate for the barista who will work during the event is €20 per hour. The event will take 4 hours. They only want to sell cappuccinos, since this is the most popular drink. Prices and quantities of coffee and milk, the only 2 ingredients of a cappuccino, can be found below.    

price per kg (1000 grams) of coffee

€ 25,00

grams of coffee per cappuccino

8

price of milk per liter (1000ml)

€ 1,10

ml of milk per cappuccino

100

REQUIRED:

  1. What is the variable cost per cappuccino in Euros?
  2. How many cappuccinos do they need to sell to break even, if they sell a cappuccino for €2,75?
  3. What is the margin of safety percentage if they sell 195 cappuccinos?
  4. How many cappuccinos do they need to sell to earn an after-tax net income of €200? Assume a tax rate of 25%.

Solutions

Expert Solution

In the cost profit volume (cvp) analysis there are many formulas to find any answer. In this question I have tried to use the most commonly used formulas for your convenience. Feel free to ask any queries related to this question.

ekkarill92 answered 2 years ago
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