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MINICASE Jen and Larrys Frozen Yogurt Company In 2016. Jennifer (Jenl Liu and Carry Mestas founded Jen and Larrys Frozen Yo
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A. How many cups of frozen yogurt would have to be sold in order for the firm to reach its projected revenues of $1.2 Millions
A. # of cups to breakeven = 1200000/$3 =        400,000.00 Cups
B. Calculate the dolar amount of EBDAT if Jen and Larry's Frozen Yogurt Company achieves the forecasted $1.2 million in sales for 2017. What would EBDAT be as a percent of revenues
EBTDA = Revenues (R) - Variable Costs (VC) – Cash Fixed Costs (CFC)
EBDAT = 1,200,000 - (1.50 x 400,000) - 180,000 - 200,000 - 15,000 $    205,000.00
EBDAT/Sales = $205,000/$1,200,000 17.08%
C. Larry believe that under a worst-case scenario, yogurt revenues would be at the 2016 level of $600,000 even after plans and expenditures were put in place to increase revenues in 2017. What would happen to the venture's EBDAT?
Worst case scenario revenue = $    600,000.00
# of cups to breakeven = $600,000/$3 = $    200,000.00
EBTDA = Revenues (R) - Variable Costs (VC) – Cash Fixed Costs (CFC)
EBDAT = 600,000 - (1.50x200,000) - 180,000 - 200,000 - 15,000        (95,000.00)
D. Jen and Larry also believe that, under optimistic conditions, yogurt revenues could reach $1.5 million in 2017.what would happen to the venture's EBDAT if this were to happen
Optimisitic scenario revenue $ 1,500,000.00
# of cups to breakeven = $1,500,000/$3 = $    500,000.00
EBTDA = Revenues (R) - Variable Costs (VC) – Cash Fixed Costs (CFC)
EBDAT = 1,500,000 - (1.50x500,000) - 180,000 - 200,000 - 15,000        355,000.00
E.Calculate the EBDAT breakeven point for 2017 in terms of survival revenues for Jen and Lary's Frozen Yogurt Company. How many cups of frozen yogurt would have to be sold to reach EBDAT breakeven?
Variable Cost Revenue Ratio (VCRR) = variable costs (VC)/revenues (R)
VCRR = (1.50 x 400,000)/1,200,000                   0.50
Survival Revenues (SR) = [CFC/(1 – VCRR)]
CFC = 180,000 + 200,000  + 15,000 /(1 - .50) $    790,000.00
# of cups to breakeven $790,000/$3        263,333.33 Cups
F. Show what would happen to the EBDAT breakeven in terms of survival revenues if the cost of producing a cup of yo- gurt increased to $1.60 but the selling price remained at $3.00 per cup. How would the EBDAT breakeven change if
Production cost $1.60
VCRR = (1.60 x 400,000)/1,200,000 0.53
Survival Revenues (SR) = [CFC/(1 – VCRR)]
CFC = 180,000 + 200,000  + 15,000 /(1 - .53) $    846,428.57
# of cups to breakeven $846,428.57/$3        282,142.86 Cups
Production cost $1.40
VCRR = (1.40 x 400,000)/1,200,000 0.47
Survival Revenues (SR) = [CFC/(1 – VCRR)]
CFC = 180,000 + 200,000  + 15,000 /(1 - .47) $    740,625.00
# of cups to breakeven = $740,625/$3        246,875.00 Cups
G. Show what would happen to the EBDAT breakeven point in terms of survival sales if an additional $30,000 was spent on advertising in 2017 while the other fixed costs remained the same, production costs remained at $1.50 per cup. production costs declined to $1.40 per cup when the yogurt selling price remained at $3.00 per cup?
VCRR= (1.50 x 400,000)/1,200,000 =                   0.50
Survival Revenues (SR) = [CFC/(1 – VCRR)]
CFC = 180,000 + 230,000  + 15,000 /(1 - .50) $    850,000.00
# of cups to breakeven $850,000/$3        283,333.33 Cups
H. Now assume that, due to competition, Jen and Larry must sell their frazen yogurt for $2.80 per cup in 2017 The cost of producing the yogurt is expected to remain at $1.50 per cup and cash fixed costs are forecasted to be $395,000 ($180,000 in administrative, $200,000 in marketing, and $15,000 in interest expenses Depreciation expenses and the tax rate are also expected to remain the same as projected in the initial discussion of Jen and Larry's venture.
# of cups to breakeven = $1,200,000/ $2.80 = 428571.43 Cups
VCRR= (1.50 x 428,571)/1,200,000 =                   0.54
Survival Revenues (SR) = [CFC/(1 – VCRR)]
CFC = 180,000 + 200,000  + 15,000 /(1 - .54) $    850,769.23
# of cups to breakeven $850,769.23/$3        303,846.15 Cups
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