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Question - Three years ago, Nancy Jackson started a business that creates and delivers holiday and birthday gift baskets to students at the local university. Nancy sells the baskets for $31 each, and her variable costs are $21 per basket. She incurs $13,200 in fixed costs each year.
Required -
(a) How many baskets will Nancy have to sell this year if she wants to earn $33,000 in operating income?
(b) Last year, Nancy sold 4,400 baskets, and she believes that demand this year will be stable at 4,400 baskets. The following are the actions Nancy could take if she wants to earn $33,000 in operating income by selling only 4,400 baskets. Consider each action independently.
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