Professional Documents
Culture Documents
The Independence Nature of Life
The Independence Nature of Life
1-14 : Gina Fox has started her own company, Foxy Shirts, which manufactures imprinted shirts
for special occasions. Since she has just begun this operation, she rents the equipment from a
local printing shop when necessary. The cost of using the equipment is $350. The materials used
in one shirt cost $8, and Gina can sell these for $15 each. (a) If Gina sells 20 shirts, what will her
total revenue be? What will her total variable cost be? (b) How many shirts must Gina sell to
break even? What is the total revenue for this? 1-15 : Ray Bond sells handcrafted yard
decorations at county fairs. The variable cost to make these is $20 each, and he sells them for
$50. The cost to rent a booth at the fair is $150. How many of these must Ray sell to break
even? 1-16 : Ray Bond, from Problem 1-15, is trying to find a new supplier that will reduce his
variable cost of production to $15 per unit. If he was able to succeed in reducing this cost, what
would the break-even point be? 1-17 : Katherine DAnn is planning to finance her college
education by selling programs at the football games for State University. There is a fixed cost of
$400 for printing these programs, and the variable cost is $3. There is also a $1,000 fee that is
paid to the university for the right to sell these programs. IF Katherine was able to sell programs
for $5 each, how many would she have to sell in order to break even? 1-18 : Katherine DAnn,
from Problem 1-17, has become concerned that sales may fall, as the team is on a terrible losing
streak, and attendance has fallen off. In fact, Katherine believes that she will sell only 500
programs for the next game. If it was possible to raise the selling price of the program and still
sell 500, what would the price have to be for Katherine to break even by selling 500? 1-19 :
Farris Billiard Supply sells all types of billiard equipment, and is considering manufacturing their
own brand of pool cues. Mysti Farris, the production manager, is currently investigating the
production of a standard house pool cue that should be very popular. Upon analyzing the costs,
Mysti determines that the materials and labor cost for each cue is $25, and the fixed cost that
must be covered is $2,400 per week. With a selling price of $40 each, how many pool cues must
be sold to break even? What would the total revenue be at this break-even point? 1-20 : Mysti
Farris (See Problem 1-19) is considering raising the selling price of each cue to $50 instead of
$40. If this is done while the costs remain the same, what would the new break-even point be?
What would the total revenue be at this break-even point? 1-21 : Mysti Farris (See Problem 1-19)
believes that there is a high probability that 120 pool cues can be sold if the selling price is
appropriately set. What selling price would case the break-even point to be 120? 1-22 : Golden
Age Retirement Planners specializes in providing financial advice for people planning for a
comfortable retirement. The company offers seminars on the important topic of retirement
planning. For a typical seminar, the room rental at a hotel is $1,000, and the cost of advertising
and other incidentals is about $10,000 per seminar. The cost of the materials and special gifts for
each attendee is $60 per person attending the seminar. The company charges $250 per person
to attend the seminar as this seems to be competitive with other companies in the same
business. How many people must attend each seminar for Golden Age to break even?
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