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#### Graphing Revenues and Costs Montana Company manufactures chocolate candy

Graphing Revenues and Costs
Montana Company manufactures chocolate candy. Its manufacturing costs are as follows:

Annual fixed costs \$15,000
Variable costs \$2 per box of candy

1. Plot variable costs, fixed costs, and total costs on a graph for activity levels of 0 to 30,000 boxes of candy.
2. Plot a revenue line on the graph, assuming chat Montana sells the chocolates for \$5 a box.

C-V-P Analysis

The Last Outpost is a tourist stop in a western resort community. Kerry Yost, the owner of the shop, sells hand-woven blankets for an average price of \$30 per blanket. Kerry buys the blankets from weavers at an average cost of \$21. In addition, he has selling expenses of \$3 per blanket. Kerry rents the building for \$300 per month and pays one employee a fixed salary of \$500 per month.

1. Determine the number of blankets Kerry must sell to break even.
2. Determine the number of blankets Kerry must sell to generate a profit of \$1,000 per month.
3. Assume that Kerry can produce and sell his 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 Kerry must sell to break even.
b) Determine the number of blankets Kerry must sell to generate a profit of \$1,000 per month.

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### Option 2

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