A small coffee shop currently offers a cup of cafe latte for P106. The variable costs are P58 per cup, and 10,113 cups are sold annually and a profit of P200,617 is realized per year. A new design in making the coffee will increase the variable costs by 10% and Fixed Costs by 20% but sales will increase to 12,043 cups per year. If we employ the new design, at what selling price do we break even?

A small coffee shop currently offers a cup of cafe latte for P106. The variable costs are P58 per cup, and 10,113 cups are sold annually and a profit of P200,617 is realized per year. A new design in making the coffee will increase the variable costs by 10% and Fixed Costs by 20% but sales will increase to 12,043 cups per year. If we employ the new design, at what selling price do we break even?

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 11E

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