1st part of question:

Three years ago, Margaret Moore started a business that creates and delivers holiday and birthday gift baskets to students at the local university. Margaret sells the baskets for $26 each, and her variable costs are $16 per basket. She incurs $12,900 in fixed costs each year.

(a) 3,990 Baskeets

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Your answer is correct.

How many baskets will Margaret have to sell this year if she wants to earn $27,000 in operating income? (Round answer to 0 decimal places, e.g. 5,275.)

3,990

baskets

Last year, Margaret sold 3,800 baskets, and she believes that demand this year will be stable at 3,800 baskets. The following are the actions Margaret could take if she wants to earn $27,000 in operating income by selling only 3,800 baskets. Consider each action independently. (Round per unit answers to 2 decimal places, e.g. 52.75 and fixed cost to 0 decimal places, e.g. 5,275.)

Additional info:

Baskets $26 each

Variable Cost $ 16

$12,900 is fixed cost

1.		Raise selling price per unit to		$enter raise in selling price per unit amount in dollar rounded to 2 decimal places
2.		Reduce variable costs per unit to		$enter reduce variable costs per unit amount in dollar rounded to 2 decimal places
3.		Reduce fixed costs to		$enter reduce fixed costs per unit amount in dollar rounded to 2 decimal places