James Griffin admired his friend Diamond Walker’s success at selling scarves at local craft shows (E7-33A), so he decided to make two types of plant stands to sell at the shows.

James makes twig stands out of downed wood from his backyard and the yards of his neighbors, so his variable cost is minimal (wood screws, glue, and so forth). However, James has to purchase wood to make his oak plant stands. His unit prices and costs are as follows:

The twig stands are more popular, so James sells four twig stands for every one oak stand.
Diamond charges her friend \($350\) to share her booth at the craft shows (after all, she has paid the entrance fees). How many of each plant stand does James need to sell to break even? Will this affect the number of scarves Diamond needs to sell to break even? Explain.

Data From E7-33A:-

Diamond Walker sells homemade knit scarves for \($25\) each at local craft shows. Her contribution margin ratio is 60%. Currently, the craft show entrance fees cost Diamond \($1,500\) per year. The craft shows are raising their entrance fees by 25% next year. How many extra scarves will Diamond have to sell next year just to pay for rising entrance fee costs?

Transcribed Image Text:

Sales price..... Twig Stands $14.00 Oak Stands $40.00 Variable cost...... $ 2.00 $18.00