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Graphing Revenues and Costs
Montana Company manufactures chocolate candy

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

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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.