Problem 1: Danielle Smith from LA wanted to open up a bag shop. She needs to know how many bags that must be sold in a year to break even. The stores fixed costs for the year are estimated at $85,000. She is planning on selling the bags for $20.00 a piece. Her cost per bags is $10.50.
a. Find the operating breakeven point in number of bags.
b. What is the total operating costs at the breakeven volume found in a.
c. A marketing firm is estimating he will be able to sell an average of 1000 bags per month. Should she start the business?
d. What will be the EBIT per month if she sells 1000 bags?