Mary sells candles weekly at a local market. The candles sell for $20 and cost...
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Mary sells candles weekly at a local market. The candles sell for $20 and cost $7 to make (wax, wicks etc) and $1 to pack. Mary's fixed costs are $1,000 per month. Required: (a) What is the Contribution Margin? (1 mark) (b) How many candles does Mary need to sell to break-even for the year? (2 marks) (c) Mary would like to supplement her full-time salary by an additional $150 per week. How many additional candles does she need to sell to achieve this over the year ( 52 weeks)? ( 3 marks) (d) Due to an increase in variable costs by $5 and fixed costs by 50% per month. Mary is considering increasing the selling price to make up for the increasing costs. What should the new selling price be if she wants to maintain the same break-even point in the number of candles per month? ( 2 marks)
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