Sally is starting a crafting business. According to her business p
[#permalink]
19 May 2024, 02:11
There is a simple way to solve this. Let’s start by figuring out the total fixed costs Sally will incur in the 2 years (24 months).
Total fixed costs = $250,000 + 24(4500)
Therefore, Sally must make $358,000 in 24 months to break even.
We’re told that the profit of each store is 30% (70% of revenue is spent on costs).
The weekly revenue per store is $1000, so the monthly revenue is $4000. 30% profit is $1200. Each store will make $28,800 in 24 months.
So, 358,000 / 28800 = ~12.5
Therefore Sally needs a minimum of 13 stores because 12 stores would not generate enough profit for her to break even.