Question
You make Fidget Spinners that you can sell for $6.50 each. The materials that go into each fidget spinner include ball bearings ($1.25/unit), and plastic
You make Fidget Spinners that you can sell for $6.50 each. The materials that go into each fidget spinner include ball bearings ($1.25/unit), and plastic ($0.15/unit). Your other costs are as follows:
$0.10/unit of injection molding costs
You pay your little brother 5% commission on each unit he sells.
$100 per month for a social media advertising campaign
$3600 per year that your parents are charging you to use the garage
$3000/month to cover the salaries for you and two of your best friends who are all equal partners in this business.
Because you are using the garage, you are also required to purchase car covers upfront for each of your parents cars. This totals $750. You also need to purchase injection molds for $1500.
Your parents have offered to loan you and your two friends $4000 interest free (nice parents) to get this business started so that you can purchase all the necessary upfront equipment and your first batch of parts. Your first (and only) year projections show expected sales to be as follows. After the year, you and your friends will split any profit and use it to pay for college.
Month 1: 500 units
Month 2: 1000 units
Months 3-12: 1250 units per month
In what month will you and your friends have enough profit to pay back your parents for the $4000 loan?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started