Operating Income = (P-VC/u) Q FC

Sams Skate Shop specializes in SUPERIOR SKATES for ice hockey. Their only product is hockey skates, which they sell at $240/pair. They cost $130/pair. The shops fixed costs are $8,000 a month.

How many pairs of skates must Sam sell each month to break even? _______________

What is his break even sales volume? $_________________________

If he wants to make operating income of $8,000 a month, give his quantity ___________ and revenue $_____________

Sam is considering adding an advertising campaign that costs $1,000 a month. He expects this will increase his sales by

100 pairs of skates a month. What is his new break-even volume? _______________________

Should Sam do this advertising campaign? Yes / No / Break even (circle one)

Why?