Laura and Tyler make handmade and hand-painted tables. Their fixed costs for equ
ID: 2729333 • Letter: L
Question
Laura and Tyler make handmade and hand-painted tables. Their fixed costs for equipment and workspace are $70 per week. The variable cost per table in wood, paint, and other materials is $36. They believe they can sell the tables for $45 each. Find the break-even point for how many tables they must sell in a month. How much profit do they make in a month if they sell 12 tables? What is their new monthly break-even point if they improve their workmanship so they can sell the tables for $99 each? What would they make if they sold 12 tables in a month now?
Explanation / Answer
Contribution margin per unit= 45-36=9 per table
Fixed cost per month= 70*4=280
Break even point in units=280/9=31.11tables=31 tables
Profit if sells 12 tables
12*45 =540-36*12 =432=108-280=-172 loss
If selling price is 99
Contribution=99-36=63
Fixed cost per month =70*4=280
Break even point in units=280/63=4.44 unit
Profit on selling 12 tables
12*99 -36*12-280 =476
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