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Best Rugs is a local store selling hand-made rugs mainly to Melbourne consumers. The price is...

Best Rugs is a local store selling hand-made rugs mainly to Melbourne consumers. The price is $60 per rug. Of this amount, $40 is profit contribution. Current monthly profits are $5000 on 300 rug sales.

  1. Calculate the average variable cost per rug.                                    

  1. Calcuate total fixed cost for Best  Rugs.               

                           

  1. What is the breakeven quantity of rugs?                                            

  1. Write the total cost function for Best Rugs.                                        

  1. The Store manager is now considering the possibility of using the Internet to sell the products to potential consumers throughout Australia. Although no added capital investment is required, additional shipping and handling costs are estimated to be $10 per rug. Assume rug prices remain unchanged at $60. What percentage increase in sales  per month would be necessary to maintain current profit levels?          
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