Business, 04.03.2020 00:15, roger93

$2,000/year. The average item for sale is $4. Average costs associated with each sale are $3. His second option is to use an existing e-commerce service. This incurs an additional monthly cost of $15/month. The site takes a cut of his sales of $0.25/item, so he is planning on also increasing his prices by $0.5/item. The remaining costs stay the same

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answered: bellamuniz2015p23zr7

Here is the full question.

Jonathan is considering opening a shop for an online baseball memorabilia .He has two options. He can build the website himself and pay for hosting. This would cost him $2,000/year. The average item for sale is $4. Average costs associated with each sale are $3. His second option is to use an existing e-commerce service. This incurs an additional monthly cost of $15/month. The site takes a cut of his sales of $0.25/item, so he is planning on also increasing his prices by $0.5/item. The remaining costs stay the same .

a) What is the annual fixed cost for the e-commerce site option?

b) What is the unit price for the e-commerce option?

c) What is the variable cost for the self - developed site option?

d) If Jonathan sells 200 items , which option does he prefer?

e) If Jonathan sells 700 items, which option does he prefer?

a) $ 2,180

b) $4.5

c) $3

d) The first option

e) The second option

Explanation:

The parameters we are equipped with from the question include:

cost of building website himself and paying for hosting = $2,000/year

average item = $4

average cost = $3

monthly cost = $15/ month

sales = $ 0.25 / item

Prices increase = $0.5/item

a) The annual fixed cost for the e-commerce site option = cost +(monthly cost × 12 months)

= $2000 ($15 × 12)

= $2000 + $180

= $ 2180

b) The unit price for the e-commerce option = (average item + price increase)

= $4 + $0.5

= $ 4.5

c) Variable Cost for the first option

= average cost

= $ 3

d) If Jonathan sells 200 items

For the first option; we have:

= number of items × (average item - average cost) - cost

= $200($4 -$3) - $2000

= $200($1) -$2000

= $200 - $2000

= - $1,800

For the second option; we have;

= number of items × ( unit price- average cost) - site option

= $200 × ($4.5-$3) - $2180

= $200 × ($1.5) - $2180

= $300 - $2180

= -$1880

∴ Here, when we sells 200 items, he will prefer the first option because lesser price is associated with it.

If Jonathan sells 700 items.

For the first option; we have:

= number of items × (average item - average cost) - cost

= $700($4 -$3) - $2000

= $700($1) -$2000

= $700 - $2000

= - $1,300

For the second option; we have;

= number of items × ( unit price- average cost) - site option

= $700 × ($4.5-$3) - $2180

= $700 × ($1.5) - $2180

= $1050 - $2180

= -$1130

∴ Here, when he sells 700 items, He will prefer the second option because lesser price is associated with it.

answered: Guest

answer; bootstrapping is your answer;

answered: Guest

if you use only 25 for your entertainment and only 200 for the groceries that you really need and take out the 50 per month for the computer then that should be enough

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$2,000/year. The average item for sale is $4. Average costs associated with each sale are $3. His se...