A florist wants to open her own retail store. She researches the prices charged at three local competitor florist and estimate she can average $30 per flower arrangement. Her goal is to
have her new shop break even within one year of opening. For this analysis, the florist must
estimate fixed cost, variable cost, and how many flowers (units) will be needed to break even.
Given the following cost:
Flowers per sale = $3
Vase = $3
Annual rent = $36,000
Annual utilities = $3,600
Annual internet/telephone = $1,800
Annual wages = $80,000
Annual insurance = $6,000
Initial equipment = $20,000
What are the fixed Costs? What are the Variable Costs? What is the Break Even?