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What is the contribution margin

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Reference no: EM132052587

Matt Schmidt has spent 750$ for a tent, table, and chairs for his lemonade stand. He figures he can sell a glass of lemonade in the park to little league players for $0.75. His cost per drink is estimated to be $0.20. He also has to cover napkins, cups, and other variable costs estimated to be $0.05 per glass of lemonade sold.

He will open his business on June 1 and be open five days each week for the summer months of June-august. He will pay his parents $2 each day to transport him and his materials to and from the park.

Matt projects daily sales of 100 glasses of lemonade.

  1. What is the contribution margin?
  2. What is his breakeven point given that he wants to cover all of his costs?
  3. What day of the summer will he breakeven?

Reference no: EM132052587

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