Question

Mickey built his lemonade stand out of $75,000 worth of plywood and paint. He uses $2.25 of lemons, sugar and water to make his product. What does the selling price of the lemonade need to be to break even at 40 glasses

Answer 1

Answer:

The selling price of the lemonade need to be to break even at 40 glasses is $1,877.50

Explanation:

Assumption: Considering $75,000 as fixed cost:

Break-even = Fixed cost  / contribution per unit

40 = $75,000 / Contribution per unit

Contribution per unit = $75,000 / 40

Contribution per unit = $1875

Selling Price = $1,875 + $2.25 = 1,877.50