## Question

###### (b) Last year, Karen sold 5,000 baskets, and she believes that demand this year will be...

(b) Last year, Karen sold 5,000 baskets, and she believes that demand this year will be stable at 5,000 baskets. The following are the actions Karen could take if she wants to earn $35,000 in operating income by selling only 5,000 baskets. Consider each action independently. (Round per unit answers to 2 decimal places, es. 52.75 and fixed cost to decimal places, eg. 5,275.) $ 1. Raise selling price per unit to $ 2. Reduce variable costs per unit to $ 3. Reduce fixed costs to Assistance Used e Textbook and Media

Three years ago, Karen White started a business that creates and delivers holiday and birthday gift baskets to students at the local university. Karen sells the baskets for $33 each, and her variable costs are $23 per basket. She incurs $13,000 in fixed costs each year. (a) Your answer is correct. How many baskets will Karen have to sell this year if she wants to earn $35.000 in operating income? (Round answer to decimal places, eg. 5,275.) 4800 baskets

## Answers

(b)

The question is technically incorrect,

Since it is evident from part (a) that $35000 net operating income can be earned by selling 4800 baskets only.

So by selling 5000 baskets, company will be able to make more than $35000 of operating income, so no changes are required to be made.If you have any query, kindly comment with your query and please mark thumbs up.

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