SAVANNAH DESIGNS CVP PROBLEM:

Savannah owns a company called Savannah Designs, which makes bracelets with semiprecious stones and sells them at a local market. Savannah currently sells her bracelets for $$175$ each and expects to sell $1,000$ bracelets per year at this price. Her variable costs per bracelet are the metal and stones $($approximately $$80$ per bracelet$)$ and packaging $($$$5$ per bracelet$).$ She has total annual fixed costs of $$9,000,$ comprised of $$8,500$ for space at the market and $$500$ depreciation on display cases and signage.

Savannah estimates that if she reduces her selling price by $20\%,$ she will sell $30\%$ more bracelets. What is Savannah Designs' expected profit if she reduces her selling price by $20\%?$

Question $18$ options:

$$108,000$

$$71,500$

$$46,000$

$$62,500$