Question
Rachael sells a single product, Fortune Crystals, at the local markets and over the internet. Estimated data relating to 2020 is: Annual sales Selling price
Rachael sells a single product, Fortune Crystals, at the local markets and over the internet. Estimated data relating to 2020 is:
Annual sales Selling price per crystal Purchase price per crystal Annual fixed marketing costs Variable marketing costs per crystal Annual fixed administration costs
REQUIRED:
2,500 crystals $30 $8 $2,000
$3 $9,500
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a) Calculate total fixed costs and unit contribution margin per crystal.
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b) Calculate the breakeven point in units for 2020.
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c) Calculate the number of crystals that Rachael would need to sell to make a profit of $20,000 for the year.
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d) If Rachael can buy the Fortune Crystals for less than the current purchase price will the breakeven point increase or decrease? Explain the reason for your answer.
10
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