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PROBLEMS: 1. V Boutique is a fashion house that designs, manufactures, and sells evening gowns. Their lowest-selling design is a vibrant green strapless gown in Dupioni silk. V Boutique is considering lowering the selling price of the gown to stimulate demand. However, before lowering the price, they must evaluate the total costs associated with the gown. Fabric and materials - $62/gown Labor to construct the gown - $40/gown Equipment cost for these gowns (steamer and sewing machines) - $3,000 V Boutique anticipates selling 500 gowns after lowering the selling price. Assuming their projection is accurate, what is the total average cost they will incur per gown? Mickey estimates that the fixed costs associated with opening his photography studio are $40,000. He expects the studio to book 260 sessions in the first year, each of which will cost him $50 to service. He estimates the studio will generate $91,000 in revenue. For Mickey, the total cost of opening his photography studio and staying in business for one year will be: Lumos Lighting sells a lamp kit for making personalized lighting. The company sells each lamp kit for $22. The average variable cost for each lamp kit is $13, and the total annual fixed cost for plant operation is $78,300. What is the break-even point in units? 4. If the fixed costs of manufacturing a new cell phone are $10,000, the sales price is $60, and the variable cost per unit is $20, the break-even point is how many units: 5. Fisher's Bakery is a new competitor of Insomnia Cookies in town. The bakery sells delicious cookies especially Abe's 3Cs (chocolate, chip, and caramel). The total annual fixed cost for the bakery is $25,000, and the variable cost per unit is $2.00. If the sales price per cookie is $6.00, what is the break-even point in units? 6. Judy is the owner of The Spot, a food truck business specializing in gourmet coffee and breakfast items such as scones. She sells a premium, roasted coffee, and inventive espresso beverages. She is trying to achieve a target markup of 200% and her costs associated with crafting an espresso beverage are $1.25 per serving. How much should she charge for an espresso drink in order to realize a 200% targeted markup? 7. Judy, the owner of The Spot, purchases freshly made scones every morning from a local bakery and is trying to achieve a target markup of 250% on the baked items. She pays $6.00 per dozen for the scones. How much should she charge for one scone in order to realize a 250% targeted markup? 8. Tai is the owner of a restaurant and bar and uses the gross profit approach for pricing all of his food and beverage items. The cheesecake dessert with a fresh fruit topping costs $2.50 and his target margin is 35%. Calculate the menu price of one slice of cheesecake to the nearest whole dollar. 9. Ginni knits sweaters for small dogs and sells them at craft shows. She would like to achieve an 80% target profit margin and each sweater costs $2 in variable costs to make. How much should Ginni charge for her hand-knitted creations? 10. Cindy runs a smoothie shop and is trying to achieve a gross profit margin of 65% on all of her items. The large fruit and protein smoothie, which is the most popular size, costs $1.25 to make. How much should Cindy charge her customers for a large smoothie
