SKATE AROUND

Case: You are providing assistance to an entrepreneur planning to start a new business. You are being asked to check the feasibility of renting in$-$line skates to individuals and small groups. To determine this, you need to calculate the break$-$even point in unit and dollar sales for the year based on the following projections:

Rent$$$$12,000$ Insurance$$$$600$

Equipment loan payment $($non$-$skate$)$$$2,400$ Utilities $($electric$,$ phone, water$)$$$1,440$ Wages and salaries$$$$27,600$

Advertising$$$$960$

Each pair of in$-$line skates will cost the business $$90.$ The first year$$s inventory will consist of $50$ pairs.

The projected average sale is $$10$ per rental. With a six$-$day$-$a$-$week operation, your group projects an average rental of $30$ pairs a day, producing sales of $$1,800$ per week.

Questions:

$1.$ How much are total fixed costs?

$2.$ How much are total variable costs?

$3.$ What is the variable cost per unit?

$4.$ What is the variable$-$cost margin?

$5.$ What is the break$-$even point in units?

$6.$ What is the break$-$even point in dollars?