Problem: HiTech currently sells the HiTech camera for $1,000, and earns a 22% margin on each unit sold. Additionally, the credit card issuer charges a $5.00 fee on each transaction processed.
Please explain your logic, thoughts, and details on how you derive your answers. Please provide any assumptions and definitions used.
Q1. What is the net profit to HiTech on the sale of one HiTech camera purchased by credit card?
Q2. A particular purchaser of a HiTech camera, is unsatisfied with the product. He disputes the purchase of the HiTech camera with his credit card company and issues a chargeback. Now HiTech must refund the purchaser his full purchase price as well as incur a chargeback fee of $25.00. What is the net loss to HiTech when a purchase of a HiTech camera is chargedback?
Q3. How many additional units of the HiTech camera must be sold in order to cover the loss of one HiTech camera that is chargedback?