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What is contribution margin

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Reference no: EM131572216

Using the attached break even analysis templates answer questions the following questions. Copy and paste your spreadsheet answers into a WORD document and answer the questions by number:

You are going to open a business making custom cabinets. You can sell each cabinet for $80. It takes a cabinetmaker approximately 45 minutes to make one cabinet. Each cabinetmaker works an 8-hour day earning $18 per hour. Each cabinet uses $25 in raw materials. You usually produce cabinets 20 days a month and can employ two cabinetmakers. You estimate that your fixed costs are $5,000 per month.

A. What is your contribution margin?

B. How many cabinets must you make each month to break even?

C. What is your total monthly revenue if you want to earn a $2,000 profit?

Construct a break-even chart for the custom cabinet firm.

Wanda wants to open a health-food store. Her monthly expenses are rent $3,500, utilities of $1,000, insurance of $500, and payroll of $4,250. She estimates that her cost of goods is approximately 65 percent of sales. Wanda would like to make $4,000 a month for herself.

A. What is Wanda's contribution margin?

B. How much does she need in monthly sales to break even? 

C. How much does she need in monthly sales to make a profit of $4,000?

D. Construct a break-even chart for Wanda's health-food store

Sources=2

Page=3 (APA)

Reference no: EM131572216

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