Question - Gina Matheson owns and operates a successful florist shop in Bloomington, Indiana. Gina estimates that her variable costs are $0.25 per sales dollar (i.e. variable costs represent 25% of revenue) and that her fixed costs amount to $6,000 per month.
a. How does Gina's monthly profit increase as revenue increases? (Note: given that absence of unit-level data, you will need to express Gina's monthly profit in terms of revenue).
b. How much revenue does Gina need to generate each month to break even?
c. How much profit would Gina earn if her revenues were $10,000 per month?