davenport HCMG750 week 3 assignment

QUESTION

Case Study #1 – Break Even AnalysisScenario:The BeDazzled Boutique is a tourist stop in downtown Belleville, MI.Kathy Potts, the owner of the shop, sells hand-woven blankets for an average price of $30 per blanket. Kathy buys the blankets from weavers at an average cost of $21. In addition, she has selling expenses of $3 per blanket. Kathy rents the building for $300 per month and pays one employee a fixed salary of $500 per month. 1. Determine the number of blankets Kathy must sell to break even.2. Determine the number of blankets Kathy must sell to generate a profit of$1,000 per month.3. Prepare a graph to show the break-even (BE) point and fixed cost lines. Please label the X and Y axis, the variable cost area and the loss area.4. Assume that Kathy can produce and sell her 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 Kathy must sell to break even. b. Determine the number of blankets Kathy must sell to generate a profit of $1,000 per month5. Define break even analysis and its importance in the health care industry6. Define variable costs7. Define contribution margin8. Define fixed costsYour paper must be submitted as a Microsoft Word .doc document.If you are using Microsoft 2007 software you must save (“save as”) your work in an earlier version of Word to ensure you turn in the .doc format. Try this early to make sure you are able to save your work as a .doc file. Any Questions? Use the “Help Desk Forum”.

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