Background I like to jump rope for exercise. Nothing fancy, just straight skipping. I get inspiration...

   

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Background I like to jump rope for exercise. Nothing fancy, just straight skipping. I get inspiration from Lauren Jumps (https://www.instagram.com/lauren.jumps/?hl=en). Before covid, she sold office equipment. Now she oversees a fast-growing fitness business. Lauren has partnered with Dope Ropes to offer her own line of ropes. Analyze her pricing as she finishes Year 1 and heads into Year 2. Year 1 costs: o Metal parts = $0.35 / rope. o Insurance = $7,200/year. o Plastic parts = $0.55 / rope. o Salaries $55,600/year. = o Lease = $18,400/year. o Mfg labor = $4.05 / rope. Nylon parts = $0.85 / rope. Marketing = $4,400 / year. Year 1 price: $24 per rope. Year 1 sales: 4,635 ropes. Questions (for all numerical answers, show your full final equation): 1. Which costs are fixed? What was total fixed cost in Year 1? 55600+7200+18400=81200 1. Which costs are fixed? What was total fixed cost in Year 1? 55600+7200+18400=81200 Salaries, Lease and Insurance 2. Which costs are variable? What was unit variable cost in Year 1? wwwwwwwwww 0.35(4635)+0.55(4635)+4.05(4635)+.85(4635)+4400= 31283 Metal parts, plastic parts, Mfg labor, nylon parts and marketing 3. What was Lauren's contribution margin for Year 1? 24-(1.65+4.05)=18.30 4. What was Lauren's break-even point in Year 1? Was she profitable? Explain why. 81200/18.30=4,437.15| 5. Good labor is hard to find, so Lauren will raise wages in Year 2. This increases manufacturing labor to $4.30 per rope. What is Lauren's new break-even point? 6. Lauren is thinking of offering a sale - $2.00 off in August. She expects this to increase sales by about 15%. At a glance - without any calculation - is demand elastic or inelastic? How do you know? 7. Based on your estimate about elasticity, should Lauren go ahead with this sale? Why? Background I like to jump rope for exercise. Nothing fancy, just straight skipping. I get inspiration from Lauren Jumps (https://www.instagram.com/lauren.jumps/?hl=en). Before covid, she sold office equipment. Now she oversees a fast-growing fitness business. Lauren has partnered with Dope Ropes to offer her own line of ropes. Analyze her pricing as she finishes Year 1 and heads into Year 2. Year 1 costs: o Metal parts = $0.35 / rope. o Insurance = $7,200/year. o Plastic parts = $0.55 / rope. o Salaries $55,600/year. = o Lease = $18,400/year. o Mfg labor = $4.05 / rope. Nylon parts = $0.85 / rope. Marketing = $4,400 / year. Year 1 price: $24 per rope. Year 1 sales: 4,635 ropes. Questions (for all numerical answers, show your full final equation): 1. Which costs are fixed? What was total fixed cost in Year 1? 55600+7200+18400=81200 1. Which costs are fixed? What was total fixed cost in Year 1? 55600+7200+18400=81200 Salaries, Lease and Insurance 2. Which costs are variable? What was unit variable cost in Year 1? wwwwwwwwww 0.35(4635)+0.55(4635)+4.05(4635)+.85(4635)+4400= 31283 Metal parts, plastic parts, Mfg labor, nylon parts and marketing 3. What was Lauren's contribution margin for Year 1? 24-(1.65+4.05)=18.30 4. What was Lauren's break-even point in Year 1? Was she profitable? Explain why. 81200/18.30=4,437.15| 5. Good labor is hard to find, so Lauren will raise wages in Year 2. This increases manufacturing labor to $4.30 per rope. What is Lauren's new break-even point? 6. Lauren is thinking of offering a sale - $2.00 off in August. She expects this to increase sales by about 15%. At a glance - without any calculation - is demand elastic or inelastic? How do you know? 7. Based on your estimate about elasticity, should Lauren go ahead with this sale? Why?