Hannah Ortega is considering expanding her business. She plans to hire a salespe

Question

Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are expected to be $7,500. The booth will be open 30 hours during the trade show. Ms. Ortega also plans to add a new product line, ProOffice, which will cost $150 per package. She will continue to sell the existing product, EZRecords, which costs $100 per package. Ms. Garcia believes that the salesperson will spend approximately 20 hours selling EZRecords and 10 hours marketing ProOffice.

Required

a.Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 80 units of EZRecords and 50 units of ProOffice. (Round "Cost per unit" to 2 decimal places.)

b.Determine the estimated total cost and cost per unit of each product, assuming that the salesperson is able to sell 200 units of EZRecords and 100 units of ProOffice.

ARE THESE CORRECT?

EZRecords ProOffice a. Total cost of saless 13,000$ 162.50 $ 25,000 $ 125$ 10,000 200.00 17,500 175 Cost per unit b. Total cost of sales$ Cost per unit

Explanation / Answer

Your answers are correct a. EZRecords ProOffice Total variable cost 8000 7500 (80*100) (50*150) Total fixed costs (based on hours spend) 5000 2500 (7500*20/30) (7500*10/30) Total cost of sales 13000 10000 Cost per unit 162.5 200 (13000/80) (10000/50) b. EZRecords ProOffice Total variable cost 20000 15000 (200*100) (100*150) Total fixed costs (based on hours spend) 5000 2500 (7500*20/30) (7500*10/30) Total cost of sales 25000 17500 Cost per unit 125 175 (25000/200) (17500/100)

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