Question

The fixed cost of making clothes for a clothing store for three years is $40,000. The number of pieces of clothing bought per year is variable and ranges between 100 and 200 pieces of clothing. Each garment is sold for $90. Look at the five scenarios where random numbers were generated to show the number of garments for three years. Scenario Year 1 Year 2 Year 3 A 134 194 127 B 143 109 141 C 170 194 104 D 171 164 122 E 141 160 173 In which of these simulated scenarios is your total income less than your total cost? A

Answer 1

Scenario B - 143 (Year 1), 109 (Year 2), 141 (Year 3)

In this scenario, the total income is 35,370. This is calculated by getting the sum of the number of garments in the span of three years and multiplying it by the rate of $90 per garment. Your income of 35,370 is lesser than your fixed cost for three years of 40,000.