Three years ago, Karen White started a business that creates and delivers holiday and birthday...
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Accounting
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 $13,400 in fixed costs each year.
Last year, Karen sold 4,400 baskets, and she believes that demand this year will be stable at 4,400 baskets. The following are the actions Karen could take if she wants to earn $35,000 in operating income by selling only 4,400 baskets. Consider each action independently.
1. Raise selling price per unit to?
2. Reduce Variable Costs per unit to?
3. Reduce fixed costs to?
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