Questions Coffee Klatch is a coffee shop in the city centre. The average selling price of a cup of coffee is 1.49 and the average variable cost per cup is 0.36 The average fixed cost per month is 1,300 An average of 2100 cups of coffee are sold each month. What is the break-even point of Coffee Klatch? a. 872 cups b. 3.611 cups C. 1.200 cups d. 1,150 cups

To find the break-even point, we need to calculate the point at which total revenue equals total cost. The total cost includes both fixed and variable costs.<br /><br />The total revenue (TR) is given by the formula:<br />\[ TR = \text{Price per unit} \times \text{Quantity sold} \]<br /><br />The total cost (TC) is given by the formula:<br />\[ TC = \text{Fixed cost} + (\text{Variable cost per unit} \times \text{Quantity sold}) \]<br /><br />Given:<br />- Price per unit = $1.49<br />- Variable cost per unit = $0.36<br />- Fixed cost = $1300<br />- Quantity sold = 2100 cups<br /><br />First, calculate the total revenue:<br />\[ TR = 1.49 \times 2100 = 3138.00 \]<br /><br />Next, calculate the total cost:<br />\[ TC = 1300 + (0.36 \times 2100) = 1300 + 756 = 2056 \]<br /><br />To find the break-even point, set total revenue equal to total cost and solve for the quantity sold:<br />\[ 1.49 \times \text{Quantity sold} = 1300 + 0.36 \times \text{Quantity sold} \]<br /><br />Let \( x \) be the quantity sold at the break-even point:<br />\[ 1.49x = 1300 + 0.36x \]<br /><br />Subtract \( 0.36x \) from both sides:<br />\[ 1.13x = 1300 \]<br /><br />Divide both sides by 1.13:<br />\[ x = \frac{1300}{1.13} \approx 1150 \]<br /><br />Therefore, the break-even point for Coffee Klatch is approximately 1150 cups of coffee.<br /><br />The correct answer is:<br />d. 1,150 cups