Selling birdcages.
Fixed cost (rent on a building, equipment, and so on) = $60,000
Expected variable costs = $12 per birdcage
Problem 1: If you plan on selling the birdcages to retail stores for $18, how many must you sell to break-even?
Problem 2: Assume that you and your partner feel that you must set a goal of achieving a $20,000 profit with your business this year. How many units would you have to sell to make that amount of profit?
Problem 3: What if you feel that you will be able to sell no more than 5,000 birdcages? What price will you have to charge to break even? To make $30,000 in profit?