Refer to the Joe’s Coffee House information below.
Joe’s Coffee House
Joe’s Coffee House has the following information available for the month of July:
$\begin{array}{lr}
\text { Sales }(2500 \text { cups) } & \$ 7500 \
\text { Variable costs } & 3250 \
\text { Fixed costs } & 4000 \
\text { Net Income } & \$ \quad 250
\end{array}$
-Each additional cup of coffee sold will increase net income by:

Question

Quizplus · Accepted Answer

Each additional cup of coffee sold will increase net income by the contribution margin per unit, which is calculated as (Sales - Variable Costs) / Units Sold = ($7500 - $3250) / 2500 = $1.70.

Refer to the Joe’s Coffee House Information Below -Each Additional Cup of Coffee Sold Will Increase Net Income