Hi,

Thanks in advance for any help you can provide.

The question is:

A previous analysis of historical data of advertising campaigns found that the mean value of orders for promotional goods is $12.50, with the company earning a gross profit of 20% on each order. The fixed cost of conducting the four promotions next year is estimated to be $15 000, with a variable cost of $3.00 per customer for mailing and handling costs.

How large a customer base must the company have to cover the cost of the promotions?

So far I have

0.20 x $12.50 = 2.50 gross profit per item

15 000 / 2.50 = 6000 customers.

The correct answer is 9231 customers.

I don't know how to incorporate the 3.00 variable in the calculation / where I'm going wrong?

Thanks in advance,

Tom