Adriane Dawkins operates a sales booth in computer software trade shows, selling an accounting software package, Account-tech. She purchases the package from a software manufacturer for \($200\) each. Booth space at the convention hall costs \($7,500\) per show.

Required:

a. Sales at past trade shows have ranged between 100 and 300 software packages per show. Determine the average cost of sales per unit if Ms. Dawkins sells 100, 150, 200, 250, or 300 units of Accounted/ at a trade show. Use the following chart to organize your answer. Is the cost of booth space fixed or variable?

b. If Ms. Dawkins wants to earn a \($60\) profit on each package of software she sells at a trade show, what price must she charge at sales volumes of 100, 150, 200, 250, or 300 units?

c. Record the total cost of booth space if Ms. Dawkins attends one, two, three, four, or five trade shows. Record your answers in the following chart. Is the cost of booth space fixed or variable relative to the number of shows attended?

d. Ms. Dawkins provides decorative shopping bags to customers who purchase software packages. Some customers take the bags; others do not. Some customers stuff more than one software package into a single bag. The number of bags varies in relation to the number of units sold, but the relationship is not proportional. Assume that Ms. Dawkins uses \($40\) of bags for every 50 software packages sold. What is the additional cost per unit sold? Is the cost fixed or variable?

Transcribed Image Text:

Sales Volume in Units (a) 100 150 Total cost of software (a x $200) $20,000 Total cost of booth rental 7,500 Total cost of sales (b) $27,500 Average cost per unit (ba). $275.00 200 250 300