Susan Hiel wanted to open up a hat shop. She needs to know how many hats must be sold in a year to break even. The stores fixed costs for the year are estimated at $85,000. She is planning on selling the hats for $20.00 a piece. Her cost per hat is $10.50.
a) Find the operating breakeven point in number of hats
b) What is the total operating costs at the breakeven volume found in a.
c) A marketing firm is estimating that she will be able to sell an average of 1,000 hats per month. Should Susan start the business?
d) What will be the EBIT per month if Susan sells 1,000 hats?
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