Randolph Runs a Lemonade Stand and Wants to Make $150

question 127

Essay

Randolph runs a lemonade stand and wants to make $150 in the next week. He sells each cup of lemonade for $0.75, while the variable cost is $0.15 for the cups and ingredients. Fixed costs such as posters and signs are $15.00.
Calculate the following:
a. Contribution margin per unit sold
b. Contribution margin ratio
c. Breakeven point in units
d. Units to be sold to earn the targeted operating income

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Definitions:

Inventory Turnover

A measure of how frequently a company sells and replaces its stock of goods within a certain period.

Times

Often refers to a multiplicative factor or frequency of occurrences within a specified period.

Accounts Receivable Period

The average number of days it takes for a business to receive payments owed by its customers for goods or services provided on credit.