In the previous week (Week 10), Craig was considering opening a retail nursery. You helped him prepare a CVP analysis. He is in his final stages of approving this opportunity. Before he gives it the green light, he would like you to do an analysis on credit and debit card fees to see how this will affect his overall costs.

Craig expects sales in the first quarter to be $40,000. Craig expects his average sale in the retail shop to be $50. To help overall sales Craig would like to accept credit and debit cards. You expect about 15% of sales being paid with cash; 75% to be paid with credit cards and remaining 10% with debit cards.

The bank has provided you with the following transaction fees for accepting credit and debit cards:

Credit Cards: $.50 per transaction + 2% of the amount charged

Debit Cards: $.20 per transaction + 1% of the amount charged

Answer the following questions to help Craig decide if he should open the retail establishment. Record your answers on this Word document under the appropriate number. Be sure to show your work for your answers.

1. How much of the total sales revenue is expected to be paid in cash?

2. How many customer transactions does the company expect to have in the first quarter?

3. How much of the total sales revenue is expected to be paid with credit cards?

4. How many customer transactions will be paid for by customers using credit cards?