Gina Fox has started her own company, Foxy Shirts, which manufactures imprinted

Question

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?

Explanation / Answer

Revenue = number of units X price per unit,

Revenue = 20 shirts X $15 each=$300.

If Gina sells 20 shirts, her total variable cost will be

Variable cost = variable cost per unit X number of units,

Variable cost = $8 cost per shirt X 20 shirts = $160

Break even = Fixed cost / ( selling price per unit – variable cost per uinit

= 350 /(15-8) =50

Total revenue for this = 15 per unit * 50 = 750

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