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9 October, 05:07

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

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  1. 9 October, 06:18
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    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
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