Lorenzo, the owner of a local poster shop, comes to you for help. While his shop has been breaking even for the past two years, it has not been able to generate a profit. For him to keep the shop open, he needs to earn at least $$12,000$ in operating income next year.

You agree to help Lorenzo and ask him for some current information about his products$$ selling price and costs. You tell him you will work through some possible scenarios that might involve changing his sales price to generate the number of units sold needed to reach his target profit.

Lorenzo shares the following information with you as you ponder different scenarios to help your client.

Selling price $$7\mathrm{.}50$

Cost for paper, per unit $$0\mathrm{.}70$

Cost for printing, per unit $$1\mathrm{.}10$

Cost for film, per unit $$0\mathrm{.}60$

Staff salaries $$48,000\mathrm{.}00$

Other operating costs $$12,120\mathrm{.}00$

Using Lorenzo$$s data and proper Excel formulas, first, plan to get an understanding of Lorenzo$$s financial situation based on breakeven. Then look at the following five pricing options$/$scenarios:

$4.$ Instead of paying the salespeople a fixed salary, move to a commission$-$based compensation plan $($save $$20,000$ in salary; incur $$1\mathrm{.}50$ per unit sold commission$),$ which should increase sales volume by $20\%.$

$5.$ Advertise on radio and social media for a combined cost of $$1,000$ and, instead of paying salespeople a fixed salary, move to a commission$-$based compensation plan $($save $$20,000$ in salary; incur $$1\mathrm{.}50$ per unit sold commission$),$ which could increase sales volume by $25\%.$