Three years ago, Marissa Moore started a business that creates and delivers holiday and birthday...
Question:
Three years ago, Marissa Moore started a business that creates and delivers holiday and birthday gift baskets to students at the local university. Marissa sells the baskets for $29 each, and her variable costs are $19 per basket. She incurs $12,100 in fixed costs each year.
How many baskets will Marissa have to sell this year if she wants to earn $28,400 in operating income?
Operating Income:
Operating income can be determined by deducting the fixed costs from the contribution margin. It is also the income after accounting for all the operating expenses but before adjusting non-operating costs.
Answer and Explanation: 1
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Marissa should sell 4,050 baskets this year if she wants to earn $28,400 in operating income.
The number of baskets that Marissa should sell to...
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Target-Profit & Break-Even Analysis
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Chapter 3 / Lesson 5
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Total costs are compared to total revenue and are either lower (profit), higher (loss), or equal (break-even point). Learn to calculate this and identify target profit, as well as establish a margin of safety to accommodate unanticipated risks.
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