Cost Analysis Report: Break-Even Point Of Sales For Each Item

Cost Analysis Report Name Institutional Affiliation Cost Analysis Report In order to establish Alaska Coffee Shop, the owner must consider using quality equipment and well-roasted beans, including a barista that can be used to make intricate latte art (Kim & Lee, 2017). Given the fact that Angelo prefers to sell coffee, espresso and other food items, it means that he has a wider portfolio. Additionally, the local demand for coffee drives the way he injects capital into his business. It is obvious that new market Angelo is about to explore has various challenges that other businesses face. However, with the amount of fixed costs and unit costs makes it a worthwhile venture. In essence, Angelo’s investment amounts to a sizeable startup in terms of investment and medium size coffee shop requirements; this will give Angelo the ability to control both variable and fixed costs. Therefore, the purpose of this costs analysis report is to determine the break-even point of sales for each item in the month, the figure for the total sales for the month, and possible policies that would improve Angelo’s business. Startup costs are usually a variable of the type of location regardless of dependence or the type of determinant involved. For the case of Angelo, he has considered to lease a shop at a fixed cost of $ 1,500. For rare cases, other investors may decide to operate a truck, which may cost $60,000 to $120,000, or buy a shop at an average cost of $80,000. Angelo has picked a viable option that will have led to lower expenses at the end of the month. Therefore, allocating $1500 for monthly lease is a calculated move. In the coffee business, there are variable costs that are incurred from purchasing the product and the coffee containers (Kim & Lee, 2017). Angelo will calculated variable costs depending on the types of products he selects. Moreover, the costs will be subject to the quantities of product that are used to ‘produce’ one unit, which is then used to determine a general focus. Item Price Sold/UnitVariable Cost/UnitRevenue Coffee2.00/cup0.25/cup75% Espresso3.00/cup0.50/cup15% Scones4.00/ea2.00/ea5% Bear Claws1.50/ea1.00/ea5% With the above data, Angelo can make more revenue from coffee and other items on the menu. For instance, let’s say he sells 75 units of coffee, 15 units of Espresso, 5 units of scones, an...