Question

" Fiona wants to sell a local advertising calendar. She knows there are 1000 households in her community, and estimates 30 percent will buy the calendar. The printing company will charge a $100 set up fee and calendars will cost $1 each to print. What price will she need to charge to cover all costs and make a $500 profit. Group of answer choices"

Answer 1

The answer is $3

Step-by-step explanation:

Pr = Q(P-VC) - FC

Where Pr is the profit made

Q is the quantity of calendar to be sold

P is the price to be charged

VC is the variable cost

FC is the fixed cost

Quantity of calendar to be produced is

30 percent of 1000

0.3 x 1000 units

= 300 units

500 = 300(x-1) - 100.

500 = 300x - 300 - 100

300x = 500 + 300 + 100

300x = 900

x = 900/300

x = 3

The price to be charged to cover all costs and make a $500 profit is therefore $3