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 1 year ago
Next > < Previous

Related Solutions

Company A sells paper coffee cups to all Doutor Coffee locations in Japan. Company B sells...
Company A sells paper coffee cups to all Doutor Coffee locations in Japan. Company B sells dinner plates to all Saizeryia restaurants in Japan. Company A charges $1 for a pack of 100 cups and Company B charges $3 for 1 dinner plate. Tell us exactly what information you would need to determine whether Company A or Company B has higher annual revenue and explain how you would calculate these two figures.
Heine Brothers’, a coffee shop chain from Louisville, Kentucky, wants to determine if the amount of...
Heine Brothers’, a coffee shop chain from Louisville, Kentucky, wants to determine if the amount of time customers spend in the “Germantown” coffee shop is different from the “Crescent Hill” coffee shop. An employee at each location times the amount of time 20 customers spends in each coffee shop. For the “Germantown” location the sample mean is 56.70 minutes with a sample standard deviation of 13.48 minutes. For the “Crescent Hill” location, the sample mean is 77.25 minutes with a...
A coffee company sells bags of coffee beans with an advertised weight of 454 grams. A...
A coffee company sells bags of coffee beans with an advertised weight of 454 grams. A random sample of 20 bags of coffee beans has an average weight of 457 grams. Weights of coffee beans per bag are known to follow a normal distribution with standard deviation 4 grams. (a) Construct a 95% confidence interval for the true mean weight of all bags of coffee beans. (1 mark) (b) Provide an interpretation of the confidence interval in (a). (1 mark)...
A coffee company sells bags of coffee beans with an advertised weight of 454 grams. A...
A coffee company sells bags of coffee beans with an advertised weight of 454 grams. A random sample of 20 bags of coffee beans has an average weight of 457 grams. Weights of coffee beans per bag are known to follow a normal distribution with standard deviation 5 grams. (a) Construct a 95% confidence interval for the true mean weight of all bags of coffee beans. (Instead of typing ±, simply type +-.) (1 mark) (b) Provide an interpretation of...
Health Foods Company sells raw snacks as well as protein bars made from raw ingredients. Health...
Health Foods Company sells raw snacks as well as protein bars made from raw ingredients. Health Foods currently has a large amount of dried fruit on hand, which can be sold as a raw snack food or processed further into one of its protein bars. There are 200 snack-size packages of dried fruit in the warehouse, each of which could sell for $8. On the other hand, Health Foods could process the fruit into protein bars that sell for $12...
You are the owner of a very small business that sells gourmet coffee. You sell only...
You are the owner of a very small business that sells gourmet coffee. You sell only one product, a 12-ounce bag of whole-bean French roast coffee. You sell each bag of coffee for $14 each, but due to the fluctuation in commodity prices, the price you pay your supplier to stock the product is constantly changing. In your first month of operations, you bought bags of coffee from your supplier in the following order: (a) 1 units at $2 each...
Suppose a small company that manufactures cereal bars own two scales that weigh their products (say...
Suppose a small company that manufactures cereal bars own two scales that weigh their products (say A and B). Quality control manager in this company is concerned that scale A is erroneous. He takes a sample of 20 cereal bars and weigh each of them using both scales A and B. Assume that you were given a spread sheet that include weights of the 20 cereal bars reported by two scales. Explain how you would approach testing the QC managers’...
Sunrise Coffee Company roasts and packs coffee beans. The process begins in the Roasting Department. From...
Sunrise Coffee Company roasts and packs coffee beans. The process begins in the Roasting Department. From the Roasting Department, the coffee beans are transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at December 31: ACCOUNT Work in Process-Roasting Department ACCOUNT NO. Date Item Debit Credit Balance Debit Credit Dec. 1 Bal., 19,700 units, 25% completed 49,644 31 Direct materials, 340,800 units 487,344 536,988 31 Direct labor 276,552 813,540 31 Factory...
Sunrise Coffee Company roasts and packs coffee beans. The process begins in the Roasting Department. From...
Sunrise Coffee Company roasts and packs coffee beans. The process begins in the Roasting Department. From the Roasting Department, the coffee beans are transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at December 31: ACCOUNT Work in Process-Roasting Department ACCOUNT NO. Date Item Debit Credit Balance Debit Credit Dec. 1 Bal., 14,200 units, 60% completed 52,540 31 Direct materials, 245,700 units 515,970 568,510 31 Direct labor 279,862 848,372 31 Factory...
Sunrise Coffee Company roasts and packs coffee beans. The process begins in the Roasting Department. From...
Sunrise Coffee Company roasts and packs coffee beans. The process begins in the Roasting Department. From the Roasting Department, the coffee beans are transferred to the Packing Department. The following is a partial work in process account of the Roasting Department at December 31: ACCOUNT Work in Process-Roasting Department ACCOUNT NO. Date Item Debit Credit Balance Debit Credit Dec. 1 Bal., 16,900 units, 60% completed 33,800 31 Direct materials, 292,400 units 330,412 364,212 31 Direct labor 180,316 544,528 31 Factory...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT