1 3 points A coffee shop has a cost of 80 per cup of gourmet

1. (+3 points)

     A coffee shop has a cost of $.80 per cup of gourmet coffee. They use a mark-up of 200% (based on cost). What price will they charge for a cup of gourmet coffee?

2. (+3 points)

A furniture store sells recliners at a 70% mark-up (based on price). If the recliner costs the store $240, what price will they charge?

3. (+3)

If a price of $250 is charged for a mini-computer, variable costs are $100 per unit, and fixed costs are $600,000, what is the break-even point in units?

4. (+1 point)

Following from the information in #3, if we expect to sell 6,000 mini-computers, will that result in a profit? (Yes or No)

Solution

Basic formula: Cost + Markup = Selling Price
(in this section markup is based on cost)
   1.Selling price= 0.80+0.80(200%)        

   =2.4

2.

2.Basic formula: Cost + Markup = Selling Price
(in this section markup is based on cost)
      Selling Price=240+240(70%)

                         =240+168=408

3.Break-even point = Cost + Operating expenses

                              TC=VC+FC

                                  =100+600,000

    Break-even point=250+100+600,000

4. Break-even point=250+100(6000)+600,000