•Building rent: $250,000 •Sewing equipment lease: $60,000 •Materials cost per un

Question

•Building rent: $250,000
•Sewing equipment lease: $60,000
•Materials cost per unit: $5
•Management salaries: $90,000
•Labor to complete 1 unit: 12 min
•Hourly wage for laborers: $10/hour
•Sales price per unit: $11
•What’s the break-even unit volume?

____________________________________

•“Kopi lewak” coffee: good to the last dropping

•How many cups do we have to sell to break even?

•Owner salary: $75k

•Rent: $40k

•Utilities: $8k

•Hourly labor: $12/hour

•Time to make 1 cup: 5 minutes

•40 pound bag of roasted beans: $320

•Beans to make 1 cup: ¼ pound

•Sales price of 1 cup: $8

Explanation / Answer

1 Particulars Amount(Rs.) Sales P.U 11 Less : Variable Cost (10/60*12) -2 Less : Material -5 Contribution P U 4 Fixed Costs Building rent 250000 Sewing Lease 60000 Management salaries 90000 Total fixed costs 400000 Break even cost Volume= Fixed costs/ Contribution PU =400000/4 = 100000 2 Particulars Amount(Rs.) Sales per Cup 8 Less: Beans per cUp = 320/40*1/4 -2 Labour per cup = 12/60*5 -1 Contribution P U 5 Fixed Costs Owner salary 75000 Rent 40000 Utilities 8000 Total fixed costs 123000 Break even cost Volume= Fixed costs/ Contribution PU =123000/5 = 24600

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