Review the Chapter opener. Johnny Cupcakes, launched by entrepreneur John Earle, produces t-shirts in unique styles and limited quantities. Selling prices typically range from $40 per shirt to $70 per shirt.

Required: Write a one page memo to John explaining:

1. Identify at least two fixed costs that will not change regardless of how many t-shirts Johnny Cupcakes produces.

2. How could overly optimistic sales estimates potentially hurt John Earle's business?

3. Explain how cost-volume-profit analysis can help John Earle manage Johnny Cupcakes.

To receive full credit you must answer all parts of the question in a one page memo to John, completed in WORD and attached. Your file must end in .doc or ,docx

You will be graded on how well you address the questions. Addressing the questions involves identifying relevant facts, applying the chapter concepts,, and answering each question completely. Proper APA formatting is expected and required (cited sources, reference page, etc.). Supplement and synthesize your analysis with outsides scholarly sources. For assistance with APA citations, please visit the following links: The American Psychological Association Website: http://www.apastyle.org/