Clark Craven started his own business, Craven Haven, last summer. He sells ice cream bars on Panama City Beach on the weekend for $4 each. Each bar has a variable cost of $1.80. Total fixed costs include primarily costs related to the rolling freezer cart and total $396 per month. During June, the business had 264 customers.
a. Calculate the break-even point in units and the break-even point in sales revenue for a month.
b. Prepare a break-even chart for Craven Haven using the template provided. Label the x- and y-axes, the three lines, and the break-even point.
c. What causes the total cost line to slope upward in a straight line on a CVP graph within the relevant range?
d. By how much can Craven Haven's revenue decline before a loss is incurred during June?
e. If total fixed costs increase, what is the effect on the margin of safety? Explain.

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The Answer of Clark Craven started his own business, Craven Haven, last summer. He sells ice cream bars on Panama City Beach on the weekend for $4 each. Each bar has a variable cost of $1.80. Total fixed costs include primarily costs related to the rolling freezer cart and total $396 per month. During June, the business had 264 customers.
a. Calculate the break-even point in units and the break-even point in sales revenue for a month.
b. Prepare a break-even chart for Craven Haven using the template provided. Label the x- and y-axes, the three lines, and the break-even point.
c. What causes the total cost line to slope upward in a straight line on a CVP graph within the relevant range?
d. By how much can Craven Haven's revenue decline before a loss is incurred during June?
e. If total fixed costs increase, what is the effect on the margin of safety? Explain.

Clark Craven Started His Own Business, Craven Haven, Last Summer