Reference no: EM132559180

Q.1. On the first day of the New Year to get her business started, Lessie, owner of Photographer Inc. paid $368 for business cards, $1,000 for a listing in Yellow Pages advertisements, and $250 for an annual business license. She also bought a professional portrait camera and studio lighting equipment for $3,000. She rents her office and studio for $1,400 per month that must be paid at the beginning of each month. She does not have a lease on the office/studio, so she can vacate the office/studio at the end of any month should she decide to move to a new location or to go out of business. After she opens the office/studio on the first day of each month, her monthly cost of electricity for lighting the office and running her coffee machine is constant at $145 per month. Additional electricity is required for the portrait studio lights, which varies directly with the number of photo sessions where each photo session uses $50 worth of electricity.Output of each photo session has a market value of $ 500.

Answer the following questions about the costs for Photographer Inc

a. What are monthly fixed costs and variable costs for this company?

b. If the owner wants to close her studio and go out of businessat the end of August, identify her sunk costs and avoidable costs.

c. What will be the number of photo sessions owner will have to book to break even in 4 months?