Margaret is a creative, artistic person. A few years ago, she had enough of spending $5 for birthday cards. She could do it herself-and she did! She created beautiful, fun cards for many occasions, and sent them to all of her friends and family. In the process, she got a lot of feedback from the recipients suggesting she could sell them. Hmm. Now there's an idea.
Margaret doesn't want to charge as much as the big greeting card companies, and yet she wants to make a little profit on these cards in order to make it worth her time. She is contemplating a selling price of $2.80 and estimates the cost of paper and other miscellaneous items to be about $0.80 per card. Her fixed costs are quite small, since she runs the small business out of her home. She estimates her fixed costs at just $480 per year.
Before actually promoting this business, she wants to feel confident that she will make money. Naturally, she turns to her CVP skills to help answer the following questions.
(a)
How many cards does Margaret need to sell to break even?
Number of cards to break even units
