Sam’s Skate Shop specializes in SUPERIOR SKATES for ice hockey. Their only product is hockey skates, which they sell at $240/pair. They cost $130/pair. The shop’s fixed costs are $8,000 a month. How many pairs of skates must Sam sell each month to break even? _______________ What is his break even sales volume? $_________________________ If he wants to make operating income of $8,000 a month, give his quantity ___________ and revenue $_____________ Sam is considering adding an advertising campaign that costs $1,000 a month. He expects this will increase his sales by 100 pairs of skates a month. What is his new break even volume? _______________________ Should Sam do this advertising campaign? Yes / No / Break even (circle one) Why?
Sam’s Skate Shop specializes in SUPERIOR SKATES for ice hockey. Their only product is hockey skates, which they sell at $240/pair. They cost $130/pair. The shop’s fixed costs are $8,000 a month. How many pairs of skates must Sam sell each month to break even? _______________ What is his break even sales volume? $_________________________ If he wants to make operating income of $8,000 a month, give his quantity ___________ and revenue $_____________ Sam is considering adding an advertising campaign that costs $1,000 a month. He expects this will increase his sales by 100 pairs of skates a month. What is his new break even volume? _______________________ Should Sam do this advertising campaign? Yes / No / Break even (circle one) Why?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sam’s Skate Shop specializes in SUPERIOR SKATES for ice hockey. Their only product is hockey skates, which they sell at $240/pair. They cost $130/pair. The shop’s fixed costs are $8,000 a month.
How many pairs of skates must Sam sell each month to break even? _______________
What is his break even sales volume? $_________________________
If he wants to make operating income of $8,000 a month, give his quantity ___________ and revenue $_____________
Sam is considering adding an advertising campaign that costs $1,000 a month. He expects this will increase his sales by
100 pairs of skates a month. What is his new break even volume? _______________________
Should Sam do this advertising campaign? Yes / No / Break even (circle one)
Why?
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Step 1 Introduction
VIEWStep 2 Computation of Break-even point in units
VIEWStep 3 1. Answer
VIEWStep 4 Computation of Break-even sales volume
VIEWStep 5 2. Answer
VIEWStep 6 Computation of new break-even point
VIEWStep 7 Answer
VIEWStep 8 Computation of break-even sales volume when advertisement expenses incurred
VIEWStep 9 Answer
VIEWStep 10 Suggestion
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