Brett wants to sell throw blankets for the holiday season at a local flea market. Brett purchases the throws for $15 and sells them to his customers for $35. The rental space is fixed fee of $1,500 for the season. Assume there is no leftover value for unsold units. If he orders 200 and demand is 150, what is the payoff?

Question

Quizplus · Accepted Answer

The revenue from selling 150 blankets is:

$35 x 150 = $5,250

The cost of purchasing 200 blankets is:

$15 x 200 = $3,000

The profit from selling 150 blankets is:

$5,250 - $3,000 = $2,250

Since the rental space fee is a fixed cost, we can subtract it from the profit to get the payoff:

$2,250 - $1,500 = $750

Therefore, the best choice is C.

Brett Wants to Sell Throw Blankets for the Holiday Season