Reference no: EM132963796

Question - The Milkshake Shack Revenue Assumptions Sales price for 12 oz. shake $10 Commission to hosting resort: 10% of gross sales (a variable cost) Cost Assumptions Materials Costs Materials for 12 oz. shake Whole milk $15 for 5 gallons = 640 oz. 3 oz. Cream $20 for 1 gallon = 128 oz. 3 oz. Sugar $10 for 15 lb. bag = 30 cups 3/4 cup Premium Vanilla Ice Cream $24 for 600 oz. 9 oz. Flavorings $.40/serving 1 serving Flavored specialty straws $.75/straw 1 straw Cups $250 for 500 12 oz. cups 1 cup Labor Two part-time employees $800/month for each Other costs Life Shack rental $500/month Cleaning and other supplies $100/month Equip: Industrial Milk Shake Maker 3 yrs $72/machine, 10 machines Equip: Industrial Refrigerator/freezer 10 yrs $480 Countertops 10 yrs $1,200 Tables and benches 3 yrs $108/set, 10 sets Annual insurance $600/year Signage $100 rental/month Two-year loan for above start-up costs: $4,780 interest of $211.85/month.

Required -

1) What is the contribution margin per unit?

2) What is the break-even volume per month?

3) If you desire a salary of $4,000/month, what is the new break-even point?