Reference no: EM133119582

Samantha is a student and in a rush to get to class last week she got a speeding ticket. The fine is $150. In order to pay for the ticket she has decided to sell beer to students as they come out of the business school this Friday. She will have to buy a cooler for $100, a permit from student affairs for $50 and spend $20 on ice. She will sell two types, Corona and Heineken. For ease of exposition, she will charge $5 per beer for either type. She can buy Corona for $24/case and Heineken for $36/case. There are 24 beers in a case. She can only buy beer by the case and cannot sell fractions of beer. She expects to sell the same number of both types of beer.

Required -

a. How many beers will Samantha have to sell to break-even? How many of each type of beer?

b. At the current product mix, how many Coronas will Samantha have to sell to pay for her speeding ticket?

c. Assume that the product mix changes to 70/30 how does that change your answer to part (a)?

d. Samantha liked this so much she decided to do this every Friday for the rest of the semester. Her cooler is in good shape and will not need to be replaced and the permit is valid for a year. Assuming she made enough on week 1 to cover her start up costs and pay off her speeding ticket, how much will she have to sell each Friday to break even going forward?