A Case Study of Cvp Analysis
1. Business overview & Cost analysis
In order to compete with other milkshake shacks on the same beach of the resort, the small shake in my shack is priced at $5.00, a medium shake costs $7.00, and a large shake is priced at $10.00. My shack offers classic flavors of chocolate, strawberry and vanilla, but also caters to eclectic tastes with raspberry, mocha, Oreo shakes and many other different flavors. I use chocolate, strawberry and other flavored syrup to provide the flavor chosen by customers. The data for milkshake costs is base on the study of existing restaurants, industry reports and research on expected minimum costs to be incurred in operating the business.
The cost of materials needed to make milkshakes is shown in table 1.
Table 1 Variable and Fixed costs to make milkshakes Small (8oz.size) Medium (10oz.size) Large (12oz.size)
Variable costs
Whole milk ($15 for a 5 gallon=740oz.) 2oz. 2.5oz. 3oz.
Cream ($20 for 1 gallon = 128oz.) 2oz. 2.5oz. 3oz.
Sugar ($10 for a 15 lb.bag=30cups) 1/4cups 1/2cups 3/4cups
Flavored syrup ($13.5 for a 96oz. bottle ) 0.5oz. 1oz. 1.5oz.
Vanilla ice cream ($24 for 600oz.) 6oz. 8oz. 10oz.
Whipped cream ($2.50 for 6.5oz. can) 0.15oz. 0.2oz. 0.25oz.
Straws 5” Color Flex Straws
0.05/piece 6” Color Flex Straws
0.06/piece 8” Color Flex Straws
0.08/piece
Cups 8oz. cups
0.4/piece 10oz. cups
0.5/piece 12oz.cups
0.6/piece
Fixed costs
Shack rental $500/mo
Business insurance $600/yr
Business license $25/mo
Milkshake blenders $700 for 10 blenders
Refrigerator/freezer $500
Shack decoration (tables, counters, chairs, umbrella) $2400
Cleaning and equipment maintenance fee $150/mo
Advertising (sign, banner, flyers) $ 125/mo
The total fixed costs shown in table 1 are $5075, which is the
In order to compete with other milkshake shacks on the same beach of the resort, the small shake in my shack is priced at $5.00, a medium shake costs $7.00, and a large shake is priced at $10.00. My shack offers classic flavors of chocolate, strawberry and vanilla, but also caters to eclectic tastes with raspberry, mocha, Oreo shakes and many other different flavors. I use chocolate, strawberry and other flavored syrup to provide the flavor chosen by customers. The data for milkshake costs is base on the study of existing restaurants, industry reports and research on expected minimum costs to be incurred in operating the business.
The cost of materials needed to make milkshakes is shown in table 1.
Table 1 Variable and Fixed costs to make milkshakes Small (8oz.size) Medium (10oz.size) Large (12oz.size)
Variable costs
Whole milk ($15 for a 5 gallon=740oz.) 2oz. 2.5oz. 3oz.
Cream ($20 for 1 gallon = 128oz.) 2oz. 2.5oz. 3oz.
Sugar ($10 for a 15 lb.bag=30cups) 1/4cups 1/2cups 3/4cups
Flavored syrup ($13.5 for a 96oz. bottle ) 0.5oz. 1oz. 1.5oz.
Vanilla ice cream ($24 for 600oz.) 6oz. 8oz. 10oz.
Whipped cream ($2.50 for 6.5oz. can) 0.15oz. 0.2oz. 0.25oz.
Straws 5” Color Flex Straws
0.05/piece 6” Color Flex Straws
0.06/piece 8” Color Flex Straws
0.08/piece
Cups 8oz. cups
0.4/piece 10oz. cups
0.5/piece 12oz.cups
0.6/piece
Fixed costs
Shack rental $500/mo
Business insurance $600/yr
Business license $25/mo
Milkshake blenders $700 for 10 blenders
Refrigerator/freezer $500
Shack decoration (tables, counters, chairs, umbrella) $2400
Cleaning and equipment maintenance fee $150/mo
Advertising (sign, banner, flyers) $ 125/mo
The total fixed costs shown in table 1 are $5075, which is the