Rachael sells a single product, Fortune Crystals, at the local markets and over the internet. Estimated data relating to 2020 is:
Annual sales
Selling price per crystal
Purchase price per crystal Annual fixed marketing costs Variable marketing costs per crystal Annual fixed administration costs
REQUIRED:
2,500 crystals $30
$8
$2,000
$3 $9,500
a) Calculate total fixed costs and unit contribution margin per crystal.
b) Calculate the breakeven point in units for 2020.
c) Calculate the number of crystals that Rachael would need to sell to make a profit of $20,000 for the year.
d) If Rachael can buy the Fortune Crystals for less than the current purchase price will the breakeven point increase or decrease? Explain the reason for your answer.
