Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand is $50.00. Her best guess is that she can sell 300 cups per week at $0.50 per cup. The variable cost of producing a cup of lemonade is $0.20.
a. Given her other assumptions, what level of sales volume will enable Julie to break even?
b. Given her other assumptions, discuss how a change in sales volume affects profit.
c. Given her other assumptions, discuss how a change in sales volume and variable cost jointly affect profit.
d. Use Excel’s Formula Auditing tools to show which cells in your spreadsheet affect profit directly.
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