The cost of the liquor in a certain drink is 24 per ounce an

The cost of the liquor in a certain drink is $.24 per ounce, and the cost of the mixer is $.04. The drink contains 2 ounces of liquor and 6 ounces of mixer, and the desired beverage cost % for the drink is 20%. What is the standard selling price for the drink?

$2.40

$3.60

$4.20

$5.25

Solution

B.$3.60.

standard cost = [2 ounces of liquor * $0.24 per ounce ] + [6 ounces of mixer *$0.04]

=> [ $0.48 + $0.24]

=>$0.72.

This is 20% of desired beverage cost on sale price.

=> standard selling price *20% =>$0.72.

=> standard selling price =$0.72 /20%

=>$3.60.