Management

Question

(A)If a florist shop has fixed overhead costs of $15,000 a month and pays suppliers $5 per bouquet on average (assuming all flowers arr worth roughly the same, how many bouquets must be sold at $45 to break even?

 

(B) What if the same shop sold smaller bouquets for $9 while the fixed cost was the same, but the variable cost paid to suppliers is $2?

 

(C) If the florist wants to sell 60 bouquets in 7 hours, what must the takt time be?

 

Answer 1

A)Total cost = fixed cost + 5*x

where x = number of bouquet sold

Profit = Revenue - total cost

Profit = 45*x - (fixed cost +5*x) = 40x - 15000

at breakeven set profit = 0

40x-15000 = 0 

solve for x = 15000/40 = 375

 

B) Profit = 9x - (fixed cost + 2x) = 0

7x - 15000 = 0

x = 2143 to break even

 

C) what is takt time? and which bouquet size is he referring to?