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James is a carpenter and he builds shelves for cupboards and sells them to several hardware shops - the maximum production possible is 500 shelves per year. Sales for the next year are expected to be 350 units and the selling price of each shelf is $250.
Fixed costs are estimated at $24,000 per yearand the cost of making each shelf is calculated as follows:
material costs$55
labour costs $45(1.5 hrs @$30 per hr)
Required:
Question a: Calculate:
1. the breakeven point per year (in units)
2. the maximum possible profit per year the target sales in dollarsif the target profit is $15,000 for the year
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