Question

George McCoy sells a newly developed camera, Sharp Vision. He purchases the cameras from the manufacturer for $120 each and rents a store in a shopping mall for $7,500 per month.

Required
a. Determine the average cost of sales per unit if Mr. McCoy sells 100, 200, 300, 400, or 500 units of Sharp Vision per month. Use the following chart to organize your answer.


b. If Mr. McCoy wants to make a gross profit of $30 on each camera he sells, what price should he charge at sales volumes of 100, 200, 300, 400, or 500 units?
c. Record the total cost of store rental if Mr. McCoy opens a camera store at one, two, three, four, or five shopping malls. Record your answers in the following chart. Is the cost of store rental fixed or variable relative to the number of stores opened?


d. Mr. McCoy provides decorative ornaments to customers who purchase cameras. Some customers take the ornaments, others do not, and some take more than one. The number of ornaments varies in relation to the number of cameras sold, but the relationship is not proportional. Assume that, on average, Mr. McCoy gives away $150 worth of ornaments for every 100 cameras sold. What is the additional cost per camera sold? Is the cost fixed orvariable?


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  • CreatedFebruary 07, 2014
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