Assignment 29978

  The customers gladly drive the short five miles to
the lamb store, because the exquisite taste of the grain-fed lambs, whose
fleece at one time was as white as snow, is beyond comparison.  The lamb
store, called Legga Lamb to Go sells the product for $8.00 per
pound and purchases them at $3.00 per pound.  Average weight per order is
5 pounds.  Variable selling costs are 20 per cent of sales per pound and
fixed costs are $180,000 annually.

 In the five years that the
lamb store has been in existence, their best year ever was selling 100,000
pounds in 2009; the worst year was 2007 when they sold 59,000 pounds.

 Required:

 a.  Determine the
gross profit per pound.  ___________ 

 b.  The break-even
sales in dollars are $ _______________________.  . 

 c.  Legga Lamp has a
target profit of $122,000.  Therefore, the sales needed to achieve this
target profit are $  _______   or  ________  pounds of
product.

 d.  Kari and Tom are
disagreeing on an important business concept.  She would like to increase
target profit to $150,000 annually.  Tom is reluctant to go along
with  this because he does not feel that the break-even point should be
moved that far to the right on the volume-cost-profit graph.  Karie snaps
back that he is confused  with too much college education and graph analysis. 
They look at you, their financial advisor, for the resolution to this
issue.  Don’t let them down.