Akeem wants to have a lemonade stand at the community fair. It costs him $2 to make each cup of lemonade plus a $40 renters free for the stand. he sells the lemonade for $6 per cup. How many cups does Akeem have to sell to break even.
To break even, Akeem needs to cover his costs, which consist of the cost of making each cup ($2) and the rental fee ($40).
Therefore, the break-even point can be calculated by dividing the total costs by the selling price per cup:
Break-even point = (Total costs) / (Selling price per cup)
Total costs = Cost of making each cup + Rental fee
Total costs = $2 + $40
Total costs = $42
Selling price per cup = $6
Break-even point = $42 / $6
Break-even point = 7
Akeem needs to sell 7 cups of lemonade to break even.
that’s wrong?
Apologies for the error. Let me recalculate:
To break even, Akeem needs to cover his costs, which consist of the cost of making each cup ($2) and the rental fee ($40).
Therefore, the break-even point can be calculated by dividing the total costs by the contribution margin per cup:
Break-even point = (Total costs) / (Contribution margin per cup)
Total costs = Cost of making each cup + Rental fee
Total costs = $2 + $40
Total costs = $42
Contribution margin per cup = Selling price per cup - Cost of making each cup
Contribution margin per cup = $6 - $2
Contribution margin per cup = $4
Break-even point = $42 / $4
Break-even point = 10.5
Akeem needs to sell approximately 11 cups of lemonade to break even.
To find out how many cups Akeem needs to sell to break even, we first need to determine his total costs. The costs consist of the cost to make each cup of lemonade and the stand rental fee.
1. Calculate the cost per cup: Since Akeem spends $2 to make each cup of lemonade, his cost per cup is $2.
2. Calculate the total cost: Since Akeem has to pay a $40 rental fee for the stand, his total cost is the sum of the cost per cup multiplied by the number of cups, and the rental fee. Let's call the number of cups Akeem needs to sell to break even "x". Therefore, the total cost can be expressed as:
Total cost = (Cost per cup * Number of cups) + Rental fee
Total cost = ($2 * x) + $40
3. Calculate the revenue: Akeem sells each cup of lemonade for $6, so his revenue is $6 multiplied by the number of cups he sells. This can be expressed as:
Revenue = Price per cup * Number of cups sold
Revenue = $6 * x
4. Find the break-even point: Akeem breaks even when his revenue equals his total cost. Therefore, we need to solve the equation where Revenue = Total cost:
$6 * x = ($2 * x) + $40
5. Solving the equation:
To solve the equation, we can subtract ($2 * x) from both sides:
$4 * x = $40
Then, divide both sides by $4:
x = $40 / $4
= 10 cups
Therefore, Akeem needs to sell 10 cups of lemonade to break even at the community fair.