Question: Refer to problem 13. Suppose Laurel plans to expand her business. The new fixed cost would be $20,000. The average variable cost reduces to $9

Refer to problem 13. Suppose Laurel plans to expand her business. The new fixed cost would be $20,000. The average variable cost reduces to $9 per unit and sales price remains at $15 per unit.

1. What is the new breakeven sales volume?

2. At what sales volume would Laurel be indifferent to the capacity scenarios outlined in problems 13 and 14?

Data from problems 13

Laurel Nelson owns a beauty salon. Laurel’s fixed costs are $15,000 per month. The average variable cost for the beauty supplies she sells is $10 per unit. The average selling price of a product that the salon sells is $15 per unit (all in U.S. dollars). What is the breakeven sales volume?

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