Rapunzel is a small business that currently sells a single product, shampoo, for \(\$ 4\) per bottle. The variable cost per bottle is \(\$ 3\). Rapunzel's fixed cost totals \(\$ 6000\).
Required:
a Calculate the following amounts for Rapunzel business:
i contribution margin per bottle of shampoo ii break-even point in bottles of shampoo iii the profit that Rapunzel will earn at a sales volume of 25000 bottles of shampoo iv the number of bottles of shampoo that Rapunzel must sell to earn a profit of \(\$ 16000\).
b Rapunzel is considering increasing its total fixed cost to \(\$ 8000\) and then also increasing the selling price of its product to \(\$ 5\). The variable cost per bottle of shampoo would remain unchanged. Repeat the calculations from

(a) using this new information. Will this decision be a good one for Rapunzel? Why or why not?
c Draw a graph with four lines to show the following:
i total contribution margin earned when Rapunzel sells from 0 to 10000 bottles of shampoo at a selling price of \(\$ 4\) per bottle ii total contribution margin earned when Rapunzel sells from 0 to 10000 bottles of shampoo at a selling price of \(\$ 5\) per bottle iii Rapunzel's fixed cost total of \(\$ 6000\)
iv Rapunzel's fixed cost total of \(\$ 8000\)
v Rapunzel's break-even point in bottles of shampoo before and after the selling price and fixed cost changes.
d Does the graph support your conclusion in

(b) above? If so, how does it support your conclusion? If not, what new or different information did you get from the graph?