Vandal Doughnuts is considering launching a new line of frozen doughnuts that customers can bake at home or coffee shops can bake in-store and sell. The estimated start-up cost is $300,000 for the materials and machines required to launch the product line. Frozen doughnuts would sell for $2.80 per unit. The variable costs for materials and labour are estimated to be $1.90 per doughnut.

 (a) Construct Cost (C), Revenue (R), and Profit (P) functions in terms of the number of doughnuts (x).

 (b) What is the breakeven point in units? In dollars?

 (c) Demand is estimated to be 20,000 frozen doughnuts per month (both customer and wholesale). How long will it take Vandal Doughnuts to breakeven?

 (d) What will the profit be when 80,000 frozen doughnuts are sold?

 (e) Sketch a graph of Vandal Doughnuts' cost, revenue, and profit functions, and identify the breakeven point.

 i. This should be done by hand on graph paper, using a ruler, or using a tablet.

 ii. Make sure to label: the axes, each of the lines (cost, revenue, and profit), and the breakeven point (BEP)

Answer rating: 100% (QA)

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