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Philip Nelson owns a fireworks store. Philip's fixed costs are $10,000 a month, and each fireworks assortment he sells costs, on average, $7. The average selling price for an assortment is $21. a. The break-even point for Philip's fireworks store is units. (Enter your response rounded up to the next whole number) b. Suppose Phillip decides to expand his business. His new fixed expenses will be $15,500, but the average cost for a fireworks assortment will fall to just $3 due to Philip's higher purchase volumes The new break-even point is units. (Enter your response rounded up to the next whole number) c. At what volume level is Philip indifferent to the two capacity alternatives outlined above? Philip's indifference point is units. (Enter your response rounded to the nearest whole number)

Philip Nelson owns a fireworks store. Philip's fixed costs are $10,000 a month, and each fireworks assortment he sells costs, on average, $7. The average selling price for an assortment is $21. a. The break-even point for Philip's fireworks store is units. (Enter your response rounded up to the next whole number) b. Suppose Phillip decides to expand his business. His new fixed expenses will be $15,500, but the average cost for a fireworks assortment will fall to just $3 due to Philip's higher purchase volumes The new break-even point is units. (Enter your response rounded up to the next whole number) c. At what volume level is Philip indifferent to the two capacity alternatives outlined above? Philip's indifference point is units. (Enter your response rounded to the nearest whole number)

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Philip Nellson owns a fireworks store. Philip's fixed costs are $10,000 a month, and each fireworks assortment he sells costs, on average, $7. The average selling price for an assortment is $21. a. The break-even point for Philip's fireworks store is units (Enter your response rounded up to the next whole number) b. Suppose Philip decides to expand his business. His new fixed expenses will be $15,500, but the average cost for a fireworks assortment will fall to just $3 due to Philip's higher purchase volumes The new break-even point is units. (Enter your response rounded up to the next whole number) c. At what volume level is Philip indifferent to the two capacity alternatives outlined above? Philip's indifference point is units. (Enter your response rounded to the nearest whole number)
Transcribed Image Text:Philip Nellson owns a fireworks store. Philip's fixed costs are $10,000 a month, and each fireworks assortment he sells costs, on average, $7. The average selling price for an assortment is $21. a. The break-even point for Philip's fireworks store is units (Enter your response rounded up to the next whole number) b. Suppose Philip decides to expand his business. His new fixed expenses will be $15,500, but the average cost for a fireworks assortment will fall to just $3 due to Philip's higher purchase volumes The new break-even point is units. (Enter your response rounded up to the next whole number) c. At what volume level is Philip indifferent to the two capacity alternatives outlined above? Philip's indifference point is units. (Enter your response rounded to the nearest whole number)
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