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1. Complete a break-even analysis for Miho's bagel shop again! This time, let's assume she will sell three kinds of bagels (more realistic!). The price, variable costs and product mix percentage for each kind is presented in the table below. Please help Miho figure out the breakeven point for each kind of bagel.

(Hint: we need to first figure out the weighted average contribution margin)

Plain

Poppy

Cinnamon-raisin

Price

1.65

1.85

2.00

Variable costs

0.45

0.55

0.80

Product mix

60%

20%

20%

Total fixed costs

$4800

2.Please complete a break-even analysis on Pandora's business model using the information from the HBS case (Exhibit 3 in last week's Pandora case). Basically, you need to tell us how many listener hours per year (or average users per day) Pandora should reach to break even. Compare your answer to Pandora's recent data (e.g., audience metrics and financial performance since 2013), and tell us if Pandora has reached the break-even point? Explain your conclusion.

Exhibit 3 Pandora Radio: Summary of Key Performance Metrics Revenue CPM rate $7.00 Average number of ads per listener per hour 7 Percent of inventory sold in typical month 60% Average ad revenue per listener per hour $0.0294 Fixed cost Head count $12,000,000 Other fixed costs $10,000,000 Variable costs per hour of music streamed Royalties $0.0154 Revenue-based commissions and other costs 0.0074 Streaming costs 0.0030 Total variable costs $0.0258 Variable cost of streaming 40 hours of music $1.0308 Variable cost of streaming 150 hours of music $3.8655 Hours played per day Number of users who use Pandora during a given day 1,800,000 Average hours per user per day 2.5 Total played hours per day 4,500,000

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