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A manager of a local clothing retail store wants to make a sales and promotion plan for next month. In order to evaluate the effectiveness of the plan, the manager identifies all the costs and other relevant information and conducts Break-even analysis. Here are the identified costs and other related information.

Monthly rent fees: $2,500

Wages for the hired employees (Monthly): $6,000

Utility fees (Monthly): $700

Other operation costs (Monthly): $1,000

Purchase price per unit: $78 (The manager purchases clothing from other retailers)

Shipping and handling cost per unit: $12

(Assume there is no other cost)

1. What is the total Fixed cost per month?

Answer 9000 :

What is the Variable cost per unit?

Answer 90 :

The manager wants to have 20% profit margin on selling price. What is the selling price per unit at the retail store?

Answer : 240 :

How many product units must be sold a month to break even?

Answer 68 :

What is the revenue at the break-even point?

Answer 409.09 :

The manager wants to have total profit of $5,000 a month. How many product units must be sold to achieve this goal?

Answer :

Now the manager considers two marketing promotion options.

Option 1: Advertising on a local cable channel next month. The advertising cost is $2,000.

How many product units must be sold to cover the Total Cost (including the advertising cost)?

Answer :

Option 2: Sales promotion next month (10% price discount on selling price).

.How many product units must be sold to cover the Total Cost (including sales promotion cost)?

Answer

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