Reference no: EM133000415
Question - Three years ago, Mary Smith started a business that creates and delivers holiday and birthday gift baskets to students at the local university. Mary sells the baskets for $25 each, and her variable costs are $15 per basket. She incurs $10,500 in fixed costs each year.
A. How many baskets will Mary have to sell this year if she wants to earn $28,000 in operating income?
B. Last year, Mary sold 3,500 baskets, and she believes that demand this year will be stable at 3,500 baskets. The following are the actions Mary could take if she wants to earn $28,000 in operating income by selling only 3,500 baskets. Consider each action independently.
-Raise selling price per unit to dollar =
-Reduce variable costs per unit to dollar =
-Reduce fixed costs to dollar=
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