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Liz Olive is considering wholesaling stuffed bunnies from Hong Kong. She needs to travel there to ensure quality and arrange transportation, which will cost $2,000.
Liz Olive is considering wholesaling stuffed bunnies from Hong Kong. She needs to travel there to ensure quality and arrange transportation, which will cost $2,000. The production cost per bunny is $8. Shipping to Japan can be done either through the postal system at $2 per bunny or via a freight company that charges a flat fee of $1,000 for a container capable of holding up to 1,000 bunnies, regardless of the actual quantity shipped. Liz plans to sell the bunnies to retailers for $20 each. There are no other costs or benefits. Required (Show your calculation): a. What is the break-even point of shipping through the postal system? b. How many units must be sold if Liz uses the freight company and she wants to have a profit of $600? c. At what output level would the two shipping methods yield the same profit
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