From Exercise 5.30, we know that Ajay Singh’s gift-wrapping service charges $3 for each package wrapped. Ajay estimates that his variable costs will total $1 per package wrapped and that his fixed costs will total $600 for the month.

Required:

a. Suppose Ajay’s variable costs were to increase by 50% per package. What is Ajay’s breakeven sales volume?

b. Suppose Ajay estimates that he will be able to wrap 3,000 packages in a month. Assume also that he wishes to earn $2,400 in profit for the month. What is the minimum price that Ajay must charge to reach his profit goal?

c. How much profit would Ajay earn if December revenue were $4,500 for the month?