Having recently graduated with a visual arts degree, Zane is considering starting a new business in this field, selling exotic artwork. He believes he can sell each piece of artwork for an average price of $600. The suppliers of the artwork will be paid a commission of 25% of the price. Artwork will be packed and delivered to the customer. Zane estimates that packing and delivery costs should be about $30 per product.

There will be additional expenses associated with running the store. Rent will be $5,400 per month. Utilities (which it is assumed will not vary from month to month) will be $990 per month. Insurance and other expenses will be $750 per month. He plans to pay himself and one sales assistant salaries of $10,500 per month ($7,500 for himself and $3,000 for his assistant).

The tax rate is assumed by Zane to be 30%.

Required:

a. Based on the information how many pieces of artwork per month would Zane need to sell to break even? Show all workings. (2 mark)

b. If Zane wanted to earn a net income (after tax) of $14,700 per month assuming all of the same prices and costs given above, what amount of revenue would he need to make per month? Show all workings. (4 marks)