20. julie james is opening a lemonade stand. she believes the fixed

20. Julie James is opening a lemonade stand. She believes

the fixed cost per week of running the stand is $50.00.

Her best guess is that she can sell 300 cups per week

at $0.50 per cup. The variable cost of producing a cup

of lemonade is $0.20.

a.     Given her other assumptions, what level of sales                                                                                                                              Given her other assumptions, what level of sales

volume will enable Julie to break even?

b.     Given her other assumptions, discuss how a change                                                                                                                           Given her other assumptions, discuss how a change

in sales volume affects profit.

C. Given her other assumptions, discuss how a change

in sales volume and variable cost jointly affect profit.

d. Use Excel’s Formula Auditing tools to show which

cells in your spreadsheet affect profit ectly.

22. You are thinking of opening a small copy shop. It

costs $5000 to rent a copier for a year, and it costs

$0.03 per copy to operate the copier. Other fixed costs

of running the store will amount to $400 per month.

You plan to charge an average of $0.10 per copy, and

the store will be open 365 days per year. Each copier

can make up to 100,000 copies per year.

a. For one to five copiers rented and daily demands

of 500, 1000, 1500, and 2000 copies per day, find

annual profit. That is, find annual profit for each of

these combinations of copiers rented and daily


b. if you rent three copiers, what daily demand for

copies will allow you to break even?

C. Graph profit as a function of the number of copiers

for a daily demand of 500 copies; for a daily

demand of 2000 copies. Inte


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