Question
Show your calculations Sarah needs your help. She wants to know: 1. What should be the average price for a dozen of cupcakes at break-
Show your calculations
Sarah needs your help. She wants to know:
1. What should be the average price for a dozen of cupcakes at break- even point (no profit- no losses). She calculated that her annual total fixed cost (included advertising) is $125,000 and her variable cost per dozen is $8. She believes that she will be able to sell on average 20 dozens per day or 7200 dozens per year.
2. If she wants to increase her promotion (fixed cost) by $15,000 and make a profit of $10,000. How many dozens should be sell per year for the price of $35 per dozen?
3. Because of increased competition, the maximum price cannot exceed $30. If the variable cost per dozen is reduced to $5, the new fixed cost is $120,000 and the profit is $10,000, how many dozens per year should she sell?
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