CVP relation and solving for unknowns, contribution margin ratio approach (LO1, LO2). Shari Kay owns and operates Perfect Petals, a successful florist shop in Bloomington, Indiana. Shari estimates...

CVP relation and solving for unknowns, contribution margin ratio approach (LO1, LO2). Shari Kay owns and operates Perfect Petals, a successful florist shop in Bloomington, Indiana. Shari estimates that her variable costs are $0.25 per sales dollar (i.e., variable costs represent 25% of revenue) and that her fixed costs amount to $6,000 per month.

Required:

a. How much revenue does Shari need to generate to earn a profit of $3,600 per month?

b. Suppose Shari estimates that she will be able to generate revenue of $15,000 in a month. Assume also that she wishes to earn $4,000 in profit each month. What is the maximum amount that she can spend on fixed costs?