Question

1. I am having a problem solving 1-19, I know the answer by playing with the numbers to get the right answer to work, but I need to understand the formula and how to get to the answer correctly. Can you please help me with the correct formula. Also, what does s' mean?

2. 1-18 Katherine D’Ann is planning to finance her college education by selling programs at the football games for State University. There is a fixed cost of $400 for printing these programs, and the variable cost is $3. There is also a $1,000 fee that is paid to the university for the right to sell these programs. If Katherine was able to sell programs for $5 each, how many would she have to sell in order to break even?

3. 1-19 Katherine D’Ann, from Problem 1-18, has become concerned that sales may fall, as the team is on a terrible losing streak and attendance has fallen off. In fact, Katherine believes that she will sell only 500 programs for the next game. If it was possible to raise the selling price of the program and still sell 500, what would the price have to be for Katherine to break even by selling 500?

Answer 1

Answer:

1-19)

Total fixed cost = 1000 + 400

                               = $1400

Total cost = Fixed cost + variable cost

                 = 1400 + 3 * 500

                 = 1400 + 1500

                 = $2900

Now, by selling 500 units, she needs to recover $2,900

Selling price to break even = 2900/500

                                            = $5.80

Therefore, she needs to sell the programs at $5.80 to break even.