Question

Olivia Schally operates a snow cone cart that she takes to outdoor festivals on the weekends. She makes the snow cones from ice shavings topped with flavored sugar syrup. She currently sells each snow cone for $3.00. The variable cost for each snow cone is $1.00 and the monthly fixed costs for operating the snow cone cart are $1,000. Olivia is evaluating the impact of changing the snow cone selling price and would like to earn at least $800 of operating income (profit) per month. Next is a screenshot from the Excel what-if analysis that Olivia prepared to evaluate the impact of possible price changes on her monthly profit.

QUESTIONS:

1. How many snow cones does Olivia need to sell in a month to break even if the selling price remains at $3.00 per snow cone?

If the selling price remains at $3.00 per snow cone, the number of snow cones in a month that Olivia needs to sell to break even is

2. How many snow cones does Olivia need to sell to break even if she increases the selling price to $3.50 per snow cone?

If Olivia increases the selling price to $3.50 per snow cone, the number of snow cones she would need to sell to break even would be .

3. How many snow cones does Olivia need to sell to reach her monthly target profit if the selling price remains at $3.00 per snow cone?

If the selling price remains at $3.00 per snow cone, the number of snow cones Olivia needs to sell to reach her monthly target profit is .

4. How many snow cones does Olivia need to sell to reach her monthly target profit if she increases the selling price to $4.00 per snow cone?

If Olivia increases the selling price to $4.00 per snow cone, the number of snow cones she would need to sell to reach her monthly target profit would be.

5. What would Olivia's monthly profit be if she increases the selling price to $3.50 and sells 750 snow cones?

If Olivia increases the selling price to $3.50 and sells 750 snow cones, her monthly profit would be

Answer 1