Using the information you obtained earlier:

a) How many racquets would Smart Sports need to sell to break-even?

b) What would the profit be if Smart Sports actually sold 1,100 racquets?

c) If you were Sam, would you go ahead? How risky is it?

Sam has also estimated how various levels of sales will affect his costs, in Table 10.3.

d) For each of the estimated levels of sales in Table 10.3, calculate the average cost per unit. What do you notice about the average cost per unit?

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Table 10.3 Number of tennis racquets sold Fixed costs Variable costs (15.25 per unit) Total cost 600 6,600 9,150 15,750 700 6,600 10,675 17,275 800 6,600 12,200 18,800 900 6,600 13,725 20,325 1,000 6,600 15,250 21,850