On recent vacation trips to Juarez, Mexico, you noticed retail stores and street vendors selling inexpensive digital cameras. (The photo stores also sold brand-name digital cameras at close to U.S. prices.) The prices for the inexpensive cameras ranged from $25 to $40 U.S. A flash of inspiration hit you. Why not sell Mexican-assembled digital cameras back home to Americans, using a van as your store? Every three months you would drive the 350 miles to Mexico and load up on these novelty digital cameras. You are thinking of negotiating to receive large-quantity discounts. You would park your van on busy streets and nearby parks, wherever you could obtain a permit. Typically you would display the cameras outside the van, but on a rainy day people could step inside. Your intention is to operate your traveling camera sale about 12 hours per week. If you could make enough money from your business, you could attend classes full-time during the day. You intend to sell the cameras at an average price of $65 a unit. Based on preliminary analysis, you have discovered that your primary fixed costs per month would be $550 for payments on a van, $175 for gas and maintenance, $75 for insurance, and $60 for a street vendor's permit. You will be driving to Mexico every three months at $600 per trip, resulting in a $200 per month travel cost. Your variable costs would be an average of $30 per camera and 45¢ for placing each camera in an attractive box.
1. How many cameras must you sell each month before you start to make a profit?
2. If the average cost of your cameras rises to $35, how many cameras must you sell each month if you hold your price to $65 per unit?