How many snow cones need to be sold for a Snowie™ snow cone cart to break even?

Photo of Snowie snow cone cartSnowie™ is a brand of flavored shaved ice that is sold in snow cones at a variety of events and locations across the United States.  Recently, a Snowie™ cart was spotted at the Kent Heritage Festival this summer. During this festival, street vendors offer a variety of foods and drinks.

At the Snowie™ cart, festival goers can purchase a 20-ounce snow cone for $4.00. For the purpose of this hypothetical example, let’s assume that the variable cost of each snow cone sold is $1.00.  Also assume that the monthly fixed costs for this Snowie™ snow cone cart total $1,500.

Questions

  1. What costs are likely to be included as variable costs for each snow cone?
  2. What costs are likely to be included as the fixed costs of operating the Snowie™ snow cone cart?
  3. Using the hypothetical example given, calculate the number of snow cones that the operator of the Snowie™ snow cone cart has to sell each month to break even.
  4. Assume that the operator of the Snowie™ snow cone cart wants to make an operating profit of $1,200 per month (before taxes.) How many snow cones must be sold to achieve this operating profit?
  5. Now think about the break even and target profit quantities you just calculated. Do you think these quantities are realistic? Support your answer. Think, for example, about number of days the cart is likely to be operated during a given month and the number of hours the cart is open for business.

Instructor Resources

These resources are provided to give the instructor flexibility for use of Accounting in the Headlines articles in the classroom. The blog posting itself can be assigned via a link to this site OR by distributing the student handout below. Alternatively, the PowerPoint file below contains a bullet point overview of the article and the discussion questions.

  • Student handout (pdf) (word) (contains entire blog posting + discussion questions)
  • PowerPoint file (brief article overview + discussion questions)

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 3.0 Unported License.

About Dr. Wendy Tietz, CPA, CMA, CGMA

Dr. Wendy Tietz is a professor of accounting at Kent State University in Kent, Ohio, USA. She is also a textbook author with Pearson Prentice-Hall.

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