Gina Fox has started her own company, Foxy Shirts, which manufactures imprinted

Question

Gina Fox has started her own company, Foxy Shirts, which manufactures imprinted shirts for special occasions. Since she has just begun this operation, she rents the equipment from a local printing shop when necessary. The cost of using the equipment is $250. The materials used in one shirt cost $10, and Gina can sell these for $15 each. (a) If Gina sells 20 shirts, what will her total revenue be? What will her total variable cost be? (b) How many shirts must Gina sell to break even? What is the total revenue for this?

Explanation / Answer

Cost of equipment = $250

Material cost per shirt = $10

Selling price per shirt = $15

a) number ofshirts sold =20

Revenue = (20*15) =$350

b) to get the Break Even Point she must sell 50 shirtsf

i.e.,50*15 -(250+(50*10)) = 750-(250+500) =0 (no profit)

and the revenue for this break even point is 50*15 = $750

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