complete question:
Fiona wants to sell a local advertising calendar. There are 1,000 households in her community, and she estimates that 30 percent will buy a calendar. The printing company will charge a $100 set up fee, and calendars will cost $4.00 each to print. She needs to cover all costs and make a $600 profit. Assume that each household will buy one calendar in one year. When she makes the $600 profit, what is the contribution per household
Answer:
contribution per household = $ 6.33333333333
Explanation:
Fiona wants to sell a local advertising calendar. There are 1000 household in her community . Her estimates for the number of the people that will purchase a calendar is 30% of the household in her community. This means 30/100 × 1000 = 300 household is the estimated number to buy her calendar.
Note that each household can only buy one calendar for that year.
Her total cost for the calendar can be calculated below:
set up fee = $ 100
cost for each calendar = $ 4
since she is producing 300 calendar = 4 × 300 =$ 1200
Total cost= 100 + 1200 = $ 1300
Total selling price - total cost price = profit
profit = $600
total cost = $ 1300
total selling price = ?
Total selling price - total cost price = profit
Total selling price - 1300 = 600
Total selling price = 600 + 1300
Total selling price = $1900
The contribution per household can be computed as follows:
Total selling price/estimated number of household to buy a calendar
contribution per household = 1900/300
contribution per household = $ 6.33333333333
