Mickey built his lemonade stand out of $75,000 worth of plywood and paint.He uses $2.25 of lemons, sugar and water to make his product.What does the selling price of the lemonade need to be to break even at 40 glasses?
A)$2,024.50
B)$1,877.25
C)$2,196.50
D)$1,956.75

Question

Quizplus · Accepted Answer

To break even, the revenue generated must cover the cost of the materials used to build the lemonade stand and the cost of producing the 40 glasses of lemonade.

The cost of the materials used to build the lemonade stand is given as $75,000.

The cost of producing 40 glasses of lemonade is given as $2.25 per glass, which amounts to a total cost of:

$2.25 x 40 = $90

Therefore, the total cost that needs to be covered is:

$75,000 + $90 = $75,090

To break even, revenues from 40 glasses should give:

Revenues = Costs

40 x selling price per glass = $75,090

Selling price per glass = $75,090/40 = $1,877.25

Hence, the best choice is B

Mickey Built His Lemonade Stand Out of $75,000 Worth of Plywood