POM 333 Quantitative Business Analysis question 1 : Gina fox has started her own

Question

POM 333 Quantitative Business Analysis

question 1: Gina fox has started her own company, foxy shirts, which manufactures imprinted shirts for special ocasions. Since she has just begun this operation, she rents the equipment from a local print when necessary. Tthe 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?

question 2: 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 ent a booth at the fair is $150 how many of these must Ray sell to break even?

Ray Bond from question number 2, 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 the break-even point be?

Explanation / Answer

Revenue for 20 shirts are $2750. Total variable cost is $2400.

Revenue per shirt it will be $137.50. Variable expense per shirt is $120.

Contribution margin per shirt=$137.50-$120=$17.50

Therefore, breakeven per shirt=$350+$17.50=$367.50

Gina, has to sell atleast 3 shirts.

Total revenue is $710

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