20. Julie James is opening a lemonade stand. She believes
the fixed cost per week of running the stand is $50.00.
Her best guess is that she can sell 300 cups per week
at $0.50 per cup. The variable cost of producing a cup
of lemonade is $0.20.
a. Given her other assumptions, what level of sales Given her other assumptions, what level of sales
volume will enable Julie to break even?
b. Given her other assumptions, discuss how a change Given her other assumptions, discuss how a change
in sales volume affects profit.
C. Given her other assumptions, discuss how a change
in sales volume and variable cost jointly affect profit.
d. Use Excel’s Formula Auditing tools to show which
cells in your spreadsheet affect profit ectly.
22. You are thinking of opening a small copy shop. It
costs $5000 to rent a copier for a year, and it costs
$0.03 per copy to operate the copier. Other fixed costs
of running the store will amount to $400 per month.
You plan to charge an average of $0.10 per copy, and
the store will be open 365 days per year. Each copier
can make up to 100,000 copies per year.
a. For one to five copiers rented and daily demands
of 500, 1000, 1500, and 2000 copies per day, find
annual profit. That is, find annual profit for each of
these combinations of copiers rented and daily
b. if you rent three copiers, what daily demand for
copies will allow you to break even?
C. Graph profit as a function of the number of copiers
for a daily demand of 500 copies; for a daily
demand of 2000 copies. Inte