c-v-p analysis

The last outpost is a tourist stop in a western resort community. Kerry Yost, the owner of the shop,sells hand-woven blankets for an average price $30 per blanket. Kerry buys the blankets from weavers at an average cost of $21. In addition, he has selling expenses of $3 per blanket. Kerry rents the building for $300 per month and pays one employee a fixed salary of $500 per month.

1. Determined the number of blankets Kerry must sell to break even

2. Determine the number of blankets Kerry must sell to generate a profit of $1000 per month

3. Assume that Kerry can produce and sell his own blankets at a total variable cost of $16 per blanket, but that he would noeed to hire one additional employee at a monthly salary of $600

a. determined the number of blankets Kerry must sell to break even

b. determined the number of blankets Kerry must sell to generate a profit of $1000 per month

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Originally Posted by coledebbie

c-v-p analysis

The last outpost is a tourist stop in a western resort community. Kerry Yost, the owner of the shop,sells hand-woven blankets for an average price $30 per blanket. Kerry buys the blankets from weavers at an average cost of $21. In addition, he has selling expenses of $3 per blanket. Kerry rents the building for $300 per month and pays one employee a fixed salary of $500 per month.

1. Determined the number of blankets Kerry must sell to break even

2. Determine the number of blankets Kerry must sell to generate a profit of $1000 per month

3. Assume that Kerry can produce and sell his own blankets at a total variable cost of $16 per blanket, but that he would noeed to hire one additional employee at a monthly salary of $600

a. determined the number of blankets Kerry must sell to break even

b. determined the number of blankets Kerry must sell to generate a profit of $1000 per month

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1. Determine the number of blankets Kerry must sell to break even.
(Sales price x Units) - (Variable cost x Units) - Fixed costs = $0
$30X - $24X - $800 = $0
$6X - $800
X = $800/6 = 133.33
X = 134
2. Determine the number of blankets Kerry must sell to generate a profit of $1,000 per month.
(Sales price x Units) - (Variable cost x Units) - Fixed costs = $1000
$30X - $24X - $800 = $1000
$6X = $1800
X = 300
3. Assume that Kerry can produce and sell his own blankets at a total variable cost of $16 per blanket, but that he would need to hire one additional employee at a monthly salary of $600.
a. Determine the number of blankets Kerry must sell to break even.
(Sales price x Units) - (Variable cost x Units) - Fixed costs = $0
$30X - $16X - $1400 = $0
$14X - $1400
X = $1400/14 = 100
X = 100
b. Determine the number of blankets Kerry must sell to generate a profit of $1,000 per month.
(Sales price x Units) - (Variable cost x Units) - Fixed costs = $1000
$30X - $16X - $1400 = $1000
$14X = $2400
X = 172