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Average variable cost per cup

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You own a cafe in a large urban area that carries a total of 500,000 per year in fixed costs. Your cafe sells only coffee for $2,50 per cup. The average variable cost per cup is $1. How many cups do you need to sell per day to break even if the price of coffee increased by 10% for a special promotion (with all other cost staying the same). How many cups would you need to sell to break even?

Interpret your answers above and give sound entrepreneur advice to the owner.

Reference no: EM131192024

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