The Coffee Express has computed its fixed costs to be $.27 for every cup of coffee it sells given annual sales of 739,000 cups. The sales price is $.99 per cup while the variable cost per cup is $.12. How many cups of coffee must it sell to break even on a cash basis?
A) 229,345
B) 146,472
C) 251,910
D) 167,630
E) 184,806

Question

Quizplus · Accepted Answer

The breakeven point is calculated as fixed costs divided by the difference between the sales price and the variable cost per cup. In this case, the breakeven point is $.27 / ($.99 - $.12) = 229,345 cups.

The Coffee Express Has Computed Its Fixed Costs to Be