Question
Sandy Wood plans to sell a new line of running shoes. A shoe merchant in Vaughanhas agreed to produce the shoes for Sandy at a
Sandy Wood plans to sell a new line of running shoes. A shoe merchant in Vaughanhas agreed to produce the shoes for Sandy at a price of $14.00 per pair of shoes. This price includes production costs, federal sales tax, packing boxes, delivery costs, and transportation insurance. Sandy recognizes that sales will vary, but she believes that she can sell an average 1,500 pairs of shoes a month. She estimates that her average monthly operating expenses will total $4,000 (including advertising, supplies, labeling, and equipment depreciation). Sandy plans to run the business from her basement, so there will be no wage expenses or handling charges.
1. If Sandy actually sells 1,500 pairs per month, what is her profit?
2. What is Sandy's breakeven point, in units, if her selling price is $52 per pair?
3. What will the total cost be per pair of shoes?
4. What is Sandy's cost per pair of shoes (variable cost)?
(Assume these are all separate questions and need to find what is asked with only the info above)
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