Jeffery is thinking about starting a new business. He recently graduated from a creative arts college and plans to open an arts and craft shop. He believes he can sell each product for an average price of $200. The businesses he obtains inventory from will be paid a commission of 25% of the price. The artwork and other items packed and delivered to the customer. Jeffery estimates that these costs associated with packing and delivery should be about $10 per product.

Additional expenses associated with running the store. Rent will be $1,800 per month. Utilities (which it is assumed will not vary from month to month) will be $330 per month. Insurance and other expenses will be $250 per month. He plans to pay himself and one sales assistant salaries of $3,500 per month ($2,500 for himself and $1,000 for his assistant).

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

Required:

a. Based on the information how many paintings per month would Jeffery need to sell to break even? Show all workings. (2 marks)

b. If Jeffery wanted to earn a net income (after tax) of $4,900 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)