Natalia makes colorful beaded necklaces and sells them at a local farmer's market. Natalia currentlysells her necklaces for $40 each. She spends approximately $18 on the materials (beads, wire, and clasp)and $2 on packaging for each necklace. She pays annual fixed costs of $4,180 ($3,500 for space at thefarmer's market, $180 for licenses and permits, and $500 annual depreciation on tent, display cases, andsignage).a) How many necklaces does Natalia need to sell in 2021 to break even?necklacesb) How many necklaces does Natalia need to sell in 2021 to earn a profit of $25,000?necklacesc) Natalia's best guess is that she will sell 1,500 necklaces in 2021. If she's correct,what is Natalia's expected 2021 profit?d) Natalia estimates that if she reduces her selling price by 15% in 2021, she will sell 20% more necklaces.What is Natalia's expected profit if she reduces her selling price by 15%?Natalia estimates that if she instead increases her selling price by 15% in 2021, she will sell 10% fewernecklaces.What is Natalia's expected profit if she instead increases her selling price by 15%?These analyses suggest that a selling price of$per necklace maximizes expected profit.e) Natalia learns that the fee to rent a space at the farmer's market will be $5,525 in2022. Natalia wants to increase her selling price just enough to absorb thisincreased cost. If Natalia wants to earn the same profit in 2021 and 2022 andbelieves she will sell 1,350 units in both years, what does her per unit selling priceneed to be in 2022 to pass the increased space fee cost along to her customers?Assume that the necklaces' selling price was $46 in 2021 and that all costs otherthan the space rental fee are unchanged from 2021 to 2022.

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Natalia makes colorful beaded necklaces and sells them at a local farmer's market. Natalia currently sells her necklaces for $40 each. She spends approximately $18 on the materials (beads, wire, and clasp) and $2 on packaging for each necklace. She pays annual fixed costs of $4,180 ($3,500 for space at the farmer's market, $180 for licenses and permits, and $500 annual depreciation on tent, display cases, and signage). a) How many necklaces does Natalia need to sell in 2021 to break even? necklaces b) How many necklaces does Natalia need to sell in 2021 to earn a profit of $25,000? necklaces c) Natalia's best guess is that she will sell 1,500 necklaces in 2021. If she's correct, what is Natalia's expected 2021 profit?

Natalia makes colorful beaded necklaces and sells them at a local farmer's market. Natalia currently sells her necklaces for $40 each. She spends approximately $18 on the materials (beads, wire, and clasp) and $2 on packaging for each necklace. She pays annual fixed costs of $4,180 ($3,500 for space at the farmer's market, $180 for licenses and permits, and $500 annual depreciation on tent, display cases, and signage). a) How many necklaces does Natalia need to sell in 2021 to break even? necklaces b) How many necklaces does Natalia need to sell in 2021 to earn a profit of $25,000? necklaces c) Natalia's best guess is that she will sell 1,500 necklaces in 2021. If she's correct, what is Natalia's expected 2021 profit?

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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