Savannah owns a company called Savannah Designs, which makes bracelets with semiprecious stones and sells them at a local market. Savannah currently sells her bracelets for $$175$ each and expects to sell $1,000$ bracelets per year at this price. Her variable costs per bracelet are the metal and stones $($approximately $$80$ per bracelet$)$ and packaging $($$$5$ per bracelet$).$  She has total annual fixed costs of $$9,000,$ comprised of $$8,500$ for space at the market and $$500$ depreciation on display cases and signage.

Savannah estimates that if she spends $$10,000$ in advertising per year, she will sell twice as many bracelets per year. What is Savannah Designs' expected profit if she begins to spend $$10,000$ in advertising per year?

Answer rating: 100% (QA)

First lets calculate Savannah Designs current profit without spending on advertising Total Revenue P... View the full answer