Question

Daisy Childs has decided to start an​ e-tail business which will sell doggie treat dispensers. Daisy will sell each unit for​ $60, and will purchase the units from a foreign supplier for​ $20 each. Import duties are​ 10% the amount paid to the foreign supplier and​ freight-in is expected to be​ $4 per unit. Packaging and shipping the units to customers will cost another​ $6 per unit. Daisy has contracted out the web page design and maintenance for​ $2,520 per month. Daisy expects no other costs as long as she​ doesn’t sell more than​ 1,000 units per month.

To make a target profit of? $2,000, Daisy’s monthly sales revenue needs to be _______

Answer 1

The number of units to achieve $2000 profit is 162.

Step-by-step explanation:

Giving the following information:

Daisy will sell each unit for​ $60 and will purchase the units from a foreign supplier for​ $20 each. Import duties are​ 10% the amount paid to the foreign supplier and​ freight-in is expected to be​ $4 per unit. Packaging and shipping the units to customers will cost another​ $6 per unit. Daisy has contracted out the web page design and maintenance for​ $2,520 per month.

Fixed cost= $2,520

Unitary cost= 20 + 2 + 4 + 6= $32

Contribution margin= $28

Break-even point= (fixed costs + profit)/ contribution margin

Break-even point= (2520 + 2000)/28= 162 units