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Three years ago, Lisa Anderson started a business that creates and delivers holiday and birthday...

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Accounting

Three years ago, Lisa Anderson started a business that creates and delivers holiday and birthday gift baskets to students at the local university. Lisa sells the baskets for $28 each, and her variable costs are $18 per basket. She incurs $13,000 in fixed costs each year.

a) How many baskets will Lisa have to sell this year if she wants to earn $31,000 in operating income? (Round answer to 0 decimal places, e.g. 5,275.) ______ baskets

b) Last year, Lisa sold 4,000 baskets, and she believes that demand this year will be stable at 4,000 baskets. The following are the actions Lisa could take if she wants to earn $31,000 in operating income by selling only 4,000 baskets. Consider each action independently. (Round per unit answers to 2 decimal places, e.g. 52.75 and fixed cost to 0 decimal places, e.g. 5,275.)

1.

Raise selling price per unit to

$_________enter raise in selling price per unit amount in dollar rounded to 2 decimal places

2.

Reduce variable costs per unit to

$_________enter reduce variable costs per unit amount in dollar rounded to 2 decimal places

3.

Reduce fixed costs to

$_________enter reduce fixed costs per unit amount in dollar rounded to 2 decimal places

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