Question

2. You own a workshop that produces custom handmade frames for diplomas. You are negotiating a contract with Loyola to sell the frames at the bookstore. Loyola decided to offer a trial contract where they will stock 20 frames at the bookstore. You estimate that the material costs for each frame is $15.00. You also estimate that it takes your employee 15 labor hours to produce the first frame. You pay your employee $25 per hour. Your initial bid accounted for learning curves (85%) and a 12% markup. The bookstore representative is receptive to your bid but is a little hesitant to award you the contract because the average cost per frame that you bid is 5% higher than their target. You respond to the customer that if they would increase their order from 20 frames to x frames, you could beat their target price. What is x?

Answer 1