a. To calculate the break-even point, we first need to determine the total fixed costs for the year. Since her fixed costs are $230 per month, over a year (12 months) this would be $230 * 12 = $2760.

The contribution margin per jar (the selling price per jar minus the variable cost per jar) is $5.00 - $2.60 = $2.40.

To find out how many jars she needs to sell to break even, we divide the total fixed costs by the contribution margin per jar. So, $2760 / $2.40 = 1150 jars.

Ingrid must sell 1150 jars per year to break even.

b. To calculate the profit, we first need to calculate the total revenue and the total cost.

The total revenue is the selling price per jar times the number of jars sold, so $5.00 * 3500 = $17,500.

The total cost is the sum of the fixed costs and the variable costs. The variable cost is the variable cost per jar times the number of jars sold, so $2.60 * 3500 = $9100. The total fixed costs for the year are $2760. So, the total cost is $9100 + $2760 = $11,860.

The profit is the total revenue minus the total cost, so $17,500 - $11,860 = $5640.

Ingrid's profit for selling 3500 jars in a year would be $5640.

c. To calculate the number of jars she must sell to have a loss of no more than $1800, we first need to determine the total costs that would result in a loss of $1800.

This would be the fixed costs for the year plus the loss, so $2760 + $1800 = $4560.

We then divide this by the contribution margin per jar to find out how many jars she needs to sell. So, $4560 / $2.40 = 1900 jars.

Ingrid must sell 1900 jars per year to have a loss of no more than $1800.

Question

a. To calculate the break-even point, we first need to determine the total fixed costs for the year. Since her fixed costs are $230 per month, over a year (12 months) this would be $230 * 12 = $2760.

The contribution margin per jar (the selling price per jar minus the variable cost per jar) is $5.00 - $2.60 = $2.40.

To find out how many jars she needs to sell to break even, we divide the total fixed costs by the contribution margin per jar. So, $2760 / $2.40 = 1150 jars.

Ingrid must sell 1150 jars per year to break even.

b. To calculate the profit, we first need to calculate the total revenue and the total cost.

The total revenue is the selling price per jar times the number of jars sold, so $5.00 * 3500 = $17,500.

The total cost is the sum of the fixed costs and the variable costs. The variable cost is the variable cost per jar times the number of jars sold, so $2.60 * 3500 = $9100. The total fixed costs for the year are $2760. So, the total cost is $9100 + $2760 = $11,860.

The profit is the total revenue minus the total cost, so $17,500 - $11,860 = $5640.

Ingrid's profit for selling 3500 jars in a year would be $5640.

c. To calculate the number of jars she must sell to have a loss of no more than $1800, we first need to determine the total costs that would result in a loss of $1800.

This would be the fixed costs for the year plus the loss, so $2760 + $1800 = $4560.

We then divide this by the contribution margin per jar to find out how many jars she needs to sell. So, $4560 / $2.40 = 1900 jars.

Ingrid must sell 1900 jars per year to have a loss of no more than $1800.

Knowee AI · Accepted Answer