Gina Matheson owns and operates a successful florist shop in Bloomington, Indiana. Gina estimates that her variable costs are $0.25 per sales dollar (i.e., variable costs represent 25% of revenue) and that her fixed costs amount to $6,000 per month.

a. How much revenue does Gina need to generate to earn a profit of $3,600 per month?
b. Suppose Gina estimates that she will be able to generate revenue of $15,000 in a month. Assume also that she wishes to earn $4,000 in profit each month. What is the maximum amount that she can spend on fixed costs?
c. Suppose Gina’s variable costs were to increase by 50%. What is Gina’s breakeven revenue per month?

  • CreatedFebruary 20, 2013
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