Marketing

1. Separate the following expenses into fixed and variable costs and show the total fixed and variable costs for each category. The business is for an equipment manufacturer that makes only one type of equipment. Your answer should be formatted like this:

Fixed Cost	Amount	Variable Cost	Amount
Total		Total

List of Monthly Expenses

Expense	Monthly $ value
Payroll (for permanent fulltime staff e.g. dispatchers)	30,000
Shipping	12,000
Raw materials	7,000
Shop & manufacturing equipment leases	5,100
Insurance	780
Sales tools such as credit card processing fees	625
Business premises lease costs over the contract period	500
Property taxes	480
Startup loan payments	450
Utilities	450
Utility usage (electricity, gas, water) that increases due to manufacturing activity	250
Accounting fees	240
Equipment breakdown repair (only occurs if a machine breaks during manufacturing use)	125
Pet grooming (2 Bichon Frises dogs, owned by the business owner)	75

2a. Calculate the number of units that must be sold each month to breakeven if the sales price is $60.00 and production cost is $40. Please show all your work. In order to make the answer easier to evaluate, use red font for your fixed cost value and blue font for your variable cost value. Your work must be clearly and neatly shown in the Word document. No handwritten answers will be marked.

2b. Calculate the number of units that must be sold each month to generate $85,000 of profit, using the figures in question 2a. Please show all your work. In order to make the answer easier to evaluate, use red font for your fixed cost value and blue font for your variable cost value. Your work must be clearly and neatly shown in the Word document. No handwritten answers will be marked.

3. Please explain what effect a 10% decrease on variable costs will have on the monthly profit.