1. David Willis is considering opening up a new copy center store near a large university. If he does, he will rent six machines for $1,200 per month for each machine. Rent, utilities, and wages will total $2,000 per month. David's cost of paper and ink is $0.01 per copy, and he plans to charge $0.05 per copy. 2. a) What is his break-even point? b) Suppose that David thinks he can get by with only four machines. What will his break-even point fall to? c) Suppose that David rents four machines and sells 200,000 copies in one month. What is his NOI for that month? d) David is considering placing in the student newspaper a $200 ad with a coupon for $0.04 per copy for orders of 50 copies or more. He estimates that if he places the ad, he will sell 250,000 copies and that about 50% of his customers will use the coupon. If he places the ad, what will his break-even point and his NOI be? Jim Kop designs game cartridges for home computers. His total fixed cost for designing a game package is $4,000. The cartridges the game is programmed into cost $4 each, and he sells them for $20 each. He currently sells 300 cartridges for each game he designs. a) What are his break-even point, NOI, and DOL now? b) If the cost of a cartridge rises to $6 and he keeps the sales price constant at $20, what will the new break-even point, NOI, and DOL be? c) If the price of a cartridge rises to $6 and he simultaneously raises the sales price to $22, what will the new break-even point, NOI, and DOL be? d) Same question as part (c), expect that fixed costs also increase to $4,500. 3. The C&D TV store currently has fixed costs of $6,000 per month and $400 per TV set. Their sales price for the TV sets is $700 each, and their current volume is 25 sets per month. a) Find C & D's break-even point and their NOI and DOL at the current level of sales. b) Find C & D's break-even point and their NOI and DOL if fixed costs decrease to $4,750 and at the same time the cost of the TV sets rises to $450. 4. The Mobile Shoe Company's weekly fixed costs (rent, utilities, etc.) have just increased to $42,000. Their variable costs for producing shoes include $5 per pair for raw materials and 1/6 labor hour. Mobile has a labor force of 100 employees, who are paid $24 per hour of labor and $27 per hour for overtime (more than 40 hours per week). a) Suppose that Mobile sells shoes for $12 per pair. What is their break-even point? b) Suppose that Mobile sells shoes for $10 per pair. What is their break-even point? c) What is the break-even point if overtime labor costs $30 instead of $27 per hour?