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Mailings Review
The manager of Sami D's Soft Pretzels has reviewed the monthly operating costs for the first year of
operations. Her costs ranged from $50,500 for 16,250 pretzels to $66,250 for 21,500 pretzels.
1. Using the high-low method, calculate the variable cost per pretzel.
2. Using the high-low method, calculate the total fixed costs
3. Write the cost equation and calculate the operating costs for 1,500, 3,000, and 5,000 pretzels.
(remember, email and ask if you don't understand)
4. Draw a graph using graph paper illustrating your total cost under this plan. Please use the
picture at the end of these instructions as a guide. Label the axes, and show your costs at
1,500, 3,000, and 5,000 pretzels. You will need to calculate revenues at 3 points of volume as
well. There is a checklist at the end of the document to make sure you include all required
aspects on your graph. Watch the video provided on BlackBoard for additional help
5. Calculate the breakeven point if each pretzel sells for $3.50. (double check this point is
occurring on your graph. If not, double check your lines)
Total Revenues
Total Costs
Breakeven Point
$
Fixed Costs
Number of Bikes
** Show your equation here **
Include on the graph (each with a different color and identified on the key/legend. Each line should
show the 3 plots used to draw the line.):
• Total Revenue Line
• Total Cost Line
• Fixed Cost Line
Break Even Point
• Shaded Profit area
• Shaded Loss area
