Question

The total monthly operating costs of Kristy’s Yogurt Ice Cream Shack are: $3,500 + $0.90X, where X = one 12 ounce serving

a. Calculate the average cost per serving at each of the following monthly volumes: 1,000, 2,000, 3,000 and 5,000, and

b. Determine the monthly volume at which the average cost per serving is $1.90

Answer 1

Requirement a
Total Monthly Operating costs of Kristy’s Yogurt Ice Cream Shack are: $3,500 + $0.90X, where X = one 12 ounce serving
		X =Volume
Particulars	Equation	1,000	2,000	3,000	5,000
Monthly Operating costs	$3,500 + $0.90X	4,400	5,300	6,200	8,000
		3500+(0.9*1000)	3500+(0.9*2000)	3500+(0.9*3000)	3500+(0.9*5000)
Average Cost per serving at each		4.40	2.65	2.07	1.60
		4,400/1,000	5,300/2,000	6,200/3,000	8,000/5,000
Requirement b
Determination monthly volume at which the average cost per serving is $1.90
X = Volume
Average Cost per serving at each =	Monthly Operating costs / Volume of serving per month
1.9 =	($3,500 + $0.90X) /X
1.9 X =	$3,500 + $0.90X
1.9 X -0.9 X =	$3,500
X =	3500 Servings