Module 5 Activity
Deadline | In-class Activity
50 Points Possible
MKT 113 Introduction to Marketing
Instructions
Complete each of the following items
and submit your responses at the end of class.
Breakeven Point Problem
Calculate the breakeven point for the
following problem. Your response should include the following elements to earn
maximum points. Each individual item is worth 5 points possible.
1.
Circle the “type
of cost for each item. FC = Fixed Cost; VC = Variable Cost)
2.
Complete the
Breakeven Point equation with the costs provide in the problem.
3.
Provide the
number of purses Joe must sell to breakeven. Provide your original calculation
and the whole number of purses needed to achieve the breakeven point.
Joe’s sister makes quilted purses for
her family and friends. Joe thinks he could sell the purses for $30 at a local
craft fair on Saturdays. Using the data provided, figure out which costs are
fixed and which are variable. Then calculate the breakeven point for Joe’s
business.
Circle One for Each Item #1 - 8
1. FC or VC Raw materials
to make the purses = $2.50 per purse
2. FC or VC Joe spends $5
in gasoline to pick up the purses and go to and from the craft fair each
Saturday
3. FC or VC Joe’s sister
wants $7.50 per purse for her time spent making them
4. FC or VC Joe has to pay
$10 for a table at the craft fair each Saturday
5. FC or VC Joe had to
purchase a business license for $10 to operate his business legally.
6. FC or VC Joe spent $20
for business cards to advertise the purse business.
7. FC or VC Joe bought
clear plastic bags to protect the purses at a cost of 50 cents per bag.
8. FC or VC Joe needs $100
for his time each Saturday.
Write
out the formula using the costs below and provide the original answer and round
that to the nearest whole number of purses that will enable Joe to achieve the
breakeven point.
9. Fill out the breakeven point formula
with the costs provided above.
Breakeven
Point = Fixed Costs
Sales Price – Variable Cost
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