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A. (25 pts) If the price is set at $4.50, how many lipsticks do they need to sell to breakeven? B. (25 pts) If the price is set at $4.50, how many lipsticks do they need to sell to earn a target profit of $100,000? C. (25 pts) Given a price of $4.50, how many lipsticks must they sell to earn a target profit of $100.000 pluS cover a $200.000 advertising

A. (25 pts) If the price is set at $4.50, how many lipsticks do they need to sell to breakeven? B. (25 pts) If the price is set at $4.50, how many lipsticks do they need to sell to earn a target profit of $100,000? C. (25 pts) Given a price of $4.50, how many lipsticks must they sell to earn a target profit of $100.000 pluS cover a $200.000 advertising

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A-D IF POSSIBLE SHOWING CALUCLATIONS 

CVP Exam Adorable Face is considering a new line of lipstick products. They would like to know if it will pay off. Estimated fixed costs are $250,000, and the manufacturing, materials, shipping and packaging cost (variable cost) per lipstick is $1.00. Show all calculations. A. (25 pts) If the price is set at $4.50, how many lipsticks do they need to sell to breakeven? B. (25 pts) If the price is set at $4.50, how many lipsticks do they need to sell to earn a target profit of $100,000? C. (25 pts) Given a price of $4.50, how many lipsticks must they sell to earn a target profit of $100,000 plus cover a $200,000 advertising budget? D. (25 pts) If they sell 80,000 lipsticks, what price should they charge (maintaining the $100,000 target profit and $200,000 advertising budget)? Extra credit (10 pts) Given a price of $4.50, what is the markup on retail? What is the markup on cost?
Transcribed Image Text:CVP Exam Adorable Face is considering a new line of lipstick products. They would like to know if it will pay off. Estimated fixed costs are $250,000, and the manufacturing, materials, shipping and packaging cost (variable cost) per lipstick is $1.00. Show all calculations. A. (25 pts) If the price is set at $4.50, how many lipsticks do they need to sell to breakeven? B. (25 pts) If the price is set at $4.50, how many lipsticks do they need to sell to earn a target profit of $100,000? C. (25 pts) Given a price of $4.50, how many lipsticks must they sell to earn a target profit of $100,000 plus cover a $200,000 advertising budget? D. (25 pts) If they sell 80,000 lipsticks, what price should they charge (maintaining the $100,000 target profit and $200,000 advertising budget)? Extra credit (10 pts) Given a price of $4.50, what is the markup on retail? What is the markup on cost?
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