+1 862 207 3288 Level A
20. Julie James is opening a lemonade stand. She be ‘ ves
the fixed cost per week of running the stand is $50.
i Her best guess is that she can sell 300 cups per week
at $0.50 per cup. The variable cost of producing a cup
of lemonade is $0.20.
a. Given her other assumptions, what level of sales
volume will enable Julie to break even?
b. Given her other assumptions. discuss how a change
in sales volume affects profit.
c. Given her other assumptions. discuss how a change
in sales volume and variable cost jointly affect pro
(1. Use Excel‘s Formula Auditing tools to show lCh
cells in your spreadsheet affect profit dir y.
are thinking of opening a 8m play. I Love
You. ’ ’ er Better! It will cost
$5 million to develop the show. There are 8 shows
per week, and you project the show will run for
100 weeks. It costs $1000 to open the theater each night.
Tickets sell for $50.00, and you earn an average of $1.50
profit per ticket holder from concessions. The theater
holds 800, and you expect 80% of the seats to be full.
a. Given your other assumptions. how many weeks l
will the play have to run for you to earn a 100%
return on the play’s development cost?
b. Given your other assumptions. how does an
increase in the percentage of seats full affect profit?
c. Given your other assumptions. determine how a
joint change in the average ticket price and number
of weeks the . – ns in ue : urofit.
d. Use Excel’ ormula Auditing tools – how which
cells in ’9’ ureads * are directly affect a by the
per . age of seats full.
22. . are I ‘nking of opening a small copy shop. It
costs $5000 to rent a copier for a year. and it costs
$0.03 per copy to operate the copier. Other fixed costs
of running the store will amount to $400 per month.
You plan to charge an average of $0.10 per copy. and
the store will be open 365 days per year. Each copier
can make up to 100.000 copies per year.
a. For one to five copiers rented and daily demands
of 500. 1000. 1500. and 2000 copies per day. find
annual profit. That is. find annual profit for each of
these combinations of copiers rented and daily
demand.
b. If you rent three copiers. what daily demand for
copies will allow you to break even?
c. Graph profit as a function of the number of copiers
for a daily demand of 500 copies; for a daily
demand of 2000 copies. Interpret your graphs.
t ~ rgia McBeal is trying to save for her retire . nt.
She -~ ‘ ves she can earn 10% on average ch year
on her reti ” – t fund. Assume th ‘ I e beginning
of each of the next I j‘ . . eorgia will allocate x
dollars to her retirement fund. If at the beginning of
