Question

Rhianna is in charge of a facility which produces and sells roast coffee. Her expense sheet can be seen below.

Item
Cost
Rent
$23,280/mo.
Salaries
$45,860/wk.
Raw coffee
$0.51/lb.
Insurance
$19,750/mo.
Advertising
$22,110/mo.
Coffee roasting
$0.32/lb

Rhianna’s coffee sells for $2.89 per pound. How much coffee must her facility sell each month to break even, to the nearest hundred pounds?
a.
120,700 pounds
b.
104,400 pounds
c.
96,700 pounds
d.
53,900 pounds


Please select the best answer from the choices provided

A
B
C
D

Answer 1

Find monthly fixed costs and the contribution per pound.

Salaries ≈ 45,860/wk × 4 wk/mo = 183,440/mo.
Fixed costs = rent 23,280 + salaries 183,440 + insurance 19,750 + advertising 22,110 = 248,580.

Contribution per lb = price − (raw + roasting) = 2.89 − (0.51+0.32) = 2.06.

Break‑even lbs = 248,580 ÷ 2.06 ≈ 120,673 ≈ 120,700 pounds.

Answer: A.