HiTech currently sells the HiTech camera for $1,000, and earns a 22% margin on each unit sold. Additionally, the credit card issuer charges a $5.00 fee on each transaction processed.
Please explain your logic, thoughts, and details on how you derive your answers. Please provide any assumptions and definitions used.
Problem 1: What is the net profit to HiTech on the sale of one HiTech camera purchased by credit card?
Problem 2: A particular purchaser of a HiTech camera, is unsatisfied with the product. He disputes the purchase of the HiTech camera with his credit card company and issues a chargeback. Now HiTech must refund the purchaser his full purchase price as well as incur a chargeback fee of $25.00. What is the net loss to HiTech when a purchase of a HiTech camera is chargedback?
Problem 3: How many additional units of the HiTech camera must be sold in order to cover the loss of one HiTech camera that is chargedback?