# The Last Outpost is a tourist stop in a western resort community. Kerry Yost, the owner of the shop, sells hand-woven blankets for an average price of \$30 per blanket. Kerry buys the blankets from weavers at an average cost of \$21. In addition, he has selling expenses of \$3 per blanket. Kerry rents the building for \$300 per month

Chapter 21, Practice Exercises #39

The Last Outpost is a tourist stop in a western resort community. Kerry Yost, the owner of the shop, sells hand-woven blankets for an average price of \$30 per blanket. Kerry buys the blankets from weavers at an average cost of \$21. In addition, he has selling expenses of \$3 per blanket. Kerry rents the building for \$300 per month and pays one employee a fixed salary of \$500 per month.

1. Determine the number of blankets Kerry must sell to break even.

2. Determine the number of blankets Kerry must sell to generate a profit of \$1,000 per month.

3. Assume that Kerry can produce and sell his own blankets at a total variable cost of \$16 per blanket, but that he would need to hire one additional employee at a monthly salary of \$600.

a. Determine the number of blankets Kerry must sell to break even.

b. Determine the number of blankets Kerry must sell to generate a profit of \$1,000 per month.