Question

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Charlie is planning to start a business selling kitten mittens. He figured that the fixed costs would be: Cats Knitting Machine Warehouse Truck $100 $5,000 $ 10,000 $2,000 He also knows that variable cost (per unit) is: $2 Yarn Labor $1 He wants to sell a pair (unit) of kitten mittens for $15. Questions: 1) Frank, the potential investor, would like to know how many pairs of kitten mittens they have to sell to break even. What is the break-even point? (2 pts) 2) Dennis, the other potential investor, would like to know how many they have to sell to make a profit of $20,000 so he can buy a boat. What's the minimum sales target they have to hit for it to happen? (2 pts) 3) Charlie is pretty sure that the demand function is as following: Q = 80,000 – 2P According to the demand function, is there enough demand for them to break even if they sell the kitten mittens for $15 a pair (unit)? In other words, how many consumers are willing to pay $15 or more for a pair of kitten mittens? (1 pts)

Answer 1

Book1- Excel AChandni Jain X Page Layout Review Help & Share File Home Insert Formulas Data View Tell me what you want to do Cut AutoSum ab Wrap Text Calibri V A A V11 General ECopy Fill Conditional Format as Cell Formatting Table Styles Paste в I U Insert Delete Format Sort & Find & A- Merge & Center .0 00 00 0 Format Painter Clear Filter Select Clipboard Font Alignment Number Styles Cells Editing ffx C1 X A В C D E F G н K L N P Q S T U V w X Y Z Calculation of ontribution $ 15 Fixed Costs Selling Cost Less Variable Cost $100 Cats Knitting Machine $ 5000 $ 10000 Yarn $2 Warehouse Labour $1 $2000 Truck $ 12 $17100 6 7 8 iBreak Even Fixed Assets Contribution S 17100 10 $12 11 12 142.583 13 143 Units 14 Let the number of units to be sold be A to earn a profit of $20000 AX 13 17100 20000 -20000 17100 15 16 17 13 A 18 A 37100 19 13 2853.85 20 A 21 2854 Units 22 23 iii) Q 80000 2P 80000 2 x 15 80000 30 24 25 79970 26 27 Accordingly 79970 customers will be available to buy the product. at a price of 15S or more 28 20 Question Sheet2 Ready 80% 01:11 O Type here to search A XENG 37 7 03-12-2019 |A