Target profits Sid owns a business in a seaside resort. He sells greeting cards. On average, each card costs $0.50 to buy and is sold for $1.20. The annual bushess fixed costs are $110,000. Sid sets a target profit for the year of $30,000. Unfortunately, Sid’s supplier decides to increase the cost of the greeting cards by 30 per cent.
a. Calculate the contribution per greeting card before the increase in the cost of the cards.
b. Calculate, using this contribution, the number of greeting cards that Sid needs to sell to achieve the target profit of $30,000.
c. Calculate the number of extra greetings cards that Sid would need to sell to maintain a target profit of $30 000 following the increase in cost per card.
d. Advise Sid of two methods by which the business could maintain profit levels without selling the extra greeting cards.
Enjoy 24/7 customer support for any queries or concerns you have.
Phone: +1 213 3772458
Email: support@gradeessays.com