Charlie is planning to start a business selling kitten mittens. He figured that the fixed costs...

 

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Charlie is planning to start a business selling kitten mittens. He figured that the fixed costs would be: Cats $100 Knitting Machine $5,000 Warehouse $10,000 Truck $2,000 He also knows that variable cost (per unit) is: Yarn Labor $2 $1 He wants to sell a pair (unit) of kitten mittens for $15. Questions: 1) Frank, the potential investor, would like to know how many pairs of kitten mittens they have to sell to break even. What is the break-even point? 2) Dennis, the other potential investor, would like to know how many they have to sell to make a profit of $20,000 so he can buy a boat. What's the minimum sales target they have to hit for it to happen? 3) Charlie is pretty sure that the demand function is as following: Q = 80,000 - 2P According to the demand function, is there enough demand for them to break even if they sell the kitten mittens for $15 a pair (unit)? In other words, how many consumers are willing to pay $15 or more for a pair of kitten mittens? Charlie is planning to start a business selling kitten mittens. He figured that the fixed costs would be: Cats $100 Knitting Machine $5,000 Warehouse $10,000 Truck $2,000 He also knows that variable cost (per unit) is: Yarn Labor $2 $1 He wants to sell a pair (unit) of kitten mittens for $15. Questions: 1) Frank, the potential investor, would like to know how many pairs of kitten mittens they have to sell to break even. What is the break-even point? 2) Dennis, the other potential investor, would like to know how many they have to sell to make a profit of $20,000 so he can buy a boat. What's the minimum sales target they have to hit for it to happen? 3) Charlie is pretty sure that the demand function is as following: Q = 80,000 - 2P According to the demand function, is there enough demand for them to break even if they sell the kitten mittens for $15 a pair (unit)? In other words, how many consumers are willing to pay $15 or more for a pair of kitten mittens?

Answer rating: 100% (QA)

Lets solve this stepbystep 1 To calculate the breakeven point number of units to sell to cover all c... View the full answer