QUESTION 1

1. Background Information for the next SIX Questions:

   Assume that Sierra and Darrick have an idea for a new venture, DIY Chef. DIY Chef will sell culinary kits to clients who place orders online. Each kit will be delivered in a separate box. In addition to providing meals to each client, each kit will provide information that teaches different and important aspects of the culinary arts. Thus, DIY Chef will help turn its clients into knowledgeable chefs. Assume that DIY Chef will sell each kit for $50.00 and that it cost DIY Chef $17.50 to create and send each kit. Assume further that DIY Chef will have $97,500 of other annual expenditures NOT directly related to each kit (e.g., salaries, marketing, rent, and legal fees).

   Consider our discussions about planning new ventures. Assume DIY Chef may raise capital from outside investors. Which item(s) should Sierra and Darrick prepare for their DIY Chef venture?

   		A 1-2 page executive summary
   		A cash flow forecast
   		A 10-slide pitch presentation
   		All of the above

1 points

QUESTION 2

1. What is DIY Chefs marginal profit each time it sells a kit:

   		$50.00
   		$17.50
   		$32.50
   		$97,500 divided by the number of kits sold

1 points

QUESTION 3

1. How many kits must DIY Chef sell during the year to break-even?

   		1 kit (DIY Chef makes money on the first kit it sells!)
   		500 kits
   		3,000 kits
   		97,500 kits

1 points

QUESTION 4

1. Assume that each DIY Chef client will purchase a kit each month for the entire year (i.e., 12 months). How many clients does DIY Chef need to break-even?

   		1 client
   		250 clients
   		3,000 clients
   		36,000 clients

1 points

QUESTION 5

1. For this question only, assume DIY Chef would like to pay Sierra and Darrick each an additional $16,250 of annual salary (thus, $32,500 of total additional salaries). How many total kits must DIY Chef sell during the year to break-even while paying these salaries and how many clients would this require (again, assume that each client buys a kit each month for the entire year)?

   		100 kits; 100 clients
   		3,000 kits; 250 clients
   		4,000 kits; 333 clients
   		130,000 kits; 10,833 clients

1 points

QUESTION 6

1. For this question only, assume DIY Chef would like to pay the additional $32,500 of salaries (for Sierra and Darrick) AND pay a Culinary Super Star $97,500 of annual salary to join DIY Chef. How many kits must DIY Chef sell during the year to break-even and how many clients would this require (again, assume that each client buys a kit each month for the entire year)?

   		6,000 kits; 500 clients
   		7,000 kits; 583 clients
   		16,000 kits; 1,333 clients
   		227,500 kits; 18,958 clients