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The Last Outpost is a tourist stop in a western resort community. Kerry Yost, the owner of the shop, sells hand-woven blankets for an average price of $30 per blanket. Kerry buys the blankets from weavers at an average cost of$21. In addition, he has selling expenses of $3 per blanket. Kerry rents the building for $300 per month and pays one employee a fixed salary of $500 per month.
1. Determine the number of blankets Kerry must sell to break even.

2. Determine the number of blankets Kerry must sell to generate a profit of $1,000 per month.

3. Assume that Kerry can produce and sell his own blankets at a total variable cost of $16 per blanket, but that he would need to hire one additional employee at a monthly salary of $600.
a. Determine the number of blankets Kerry must sell to break even.
b. Determine the number of blankets Kerry must sell to generate a profit of $1,000 per month.

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Solution Summary

Solution contains customer lifetime value of the Last Outpost .

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Hi,
Please see he response to your posing as below:
Selling price per unit =$30
Variable cost per unit =Purchase price +selling expenses per blanket =$21 +$3 =$24
Monthly fixed cost =Rent +Salary = $300+$500 =$800
1. Break even Point = Monthly fixed cost /(selling ...

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