Question

1. What is a fulfillment center?

		a distribution center that only supports e-commerce.
		none of these
		a distribution center that stores products
		a warehouse that stores products

2. What is the breakeven point using the following product information:

• Fixed costs = $17,000,500
• Variable costs = $160 per item
• Sales Price = $3150 per item

		5686
		5685.786
		None of these
		Not enough information to calculate
		5685

Need both answers

Answer 1

1) a distribution center that stores products

A distribution center offers additional services like taking the orders, processing the orders, cross docking etc. apart from storing the products. Whereas, warehouses are only for storing the products

2)

Fixed cost = 17,000,500

Variable cost = 160

Sales price = 3150

Let the breakeven quantity be Q. At Q, Total cost = Total revenue

Total cost = Fixed cost + Variable cost*Q = 17,000,500 + Q*160

Total revenue = Sales price*Q = 3150*Q

Equating the two:

17,000,500 + Q*160 = 3150*Q

Q = 5685.786

Ans 5685.786