Sue is thinking about giving horseback riding lessons. She has figured her costs per lesson will be $30. Advertising is $100 per month and rental is $1,100.

1. If Sue charges $60 per lesson, what is her contribution per unit (contribution per unit = Selling Price - Variable Cost)?

2. Using the $60 per lesson price, what is her mark-up on selling price (MUsp=(SP-C)/SP)?

3. How many riders per month would Sue need in order to break even (BE=FC + (Desired Profit)/(SP-VC))?

4. How many riders per month would Sue need if she wanted a profit of $3,000?

5. Suppose Sue raised her lesson price to $70. How many riders would she need now in order to still have a profit of $3,000

6. Assume at the $60 per lesson price, Sue gets 300 riders a month. What is her total contribution (contribution per unit x units sold = total contribution)?

7. If sue raises her price to $70 she estimates she would drop down to only 225 riders per month. Should she raise the price? Why or why not?