An entrepreneur is considering opening a coffee shop in downtown Pasadena. The building that he is considering will have a monthly lease payment of $3200 and basic utility costs of $600-per month. Two employees will be hired at $10.00/hour/employee (including overhead and benefits). Each employee will work an average of 170 hours per month. The average revenue per customer is estimated at $7.00. The variable cost of serving each customer is estimated at $2.00. (a) Calculate how many customers per month it will take for the coffee shop owner to breakeven. (b) How many customers would need to be served per month to achieve a monthly profit of $5,000?

An entrepreneur is considering opening a coffee shop in downtown Pasadena. The building that he is considering will have a monthly lease payment of $3200 and basic utility costs of $600-per month. Two employees will be hired at $10.00/hour/employee (including overhead and benefits). Each employee will work an average of 170 hours per month. The average revenue per customer is estimated at $7.00. The variable cost of serving each customer is estimated at $2.00. (a) Calculate how many customers per month it will take for the coffee shop owner to breakeven. (b) How many customers would need to be served per month to achieve a monthly profit of $5,000?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section14.A: Breakeven Analysis

Problem 6P

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