Rachel Robinson is starting a new business (she has a great idea for a new lawn chair).

comes to you to get some advice. She gives you the following details:

Expected selling price per chair

$50.00

Expected variable cost per chair

20.00

Fixed costs related to the new product

45,700

1

How many chairs will Rachel need to sell to break even?

2

How many chairs will she need to sell to generate $50,000 in

net income

?

(Assume the effective tax rate for the company will be 21%.)

Five years have passed and Rachel's lawn chair business has done very well. She now sells

two different lawn chair models (Backyard and Oceanside). Here is some information

about expected costs and sales volumes for the two models in 2025:

Backyard

Oceanside

Selling price per bag

150.00

$

75.00

$

Variable cost per bag

75.00

35.00

Expected sales per year (in units)

2,000

6,000

Fixed costs per year

225,000

$

3

What is the anticipated level of pre-tax profits (in total) given the expected sales volumes?

4

How many chairs, in total, does Rachel have to sell to break even in 2025?