Break-even analysis: A. Using

Break-even analysis:

A. Using the information below, how many units do you need to
sell in a month to break even? (4 points)

Selling price: $30/unit

Revenues last month: $93,750

Units sold last month: 3,125

Rent for building: $3000/month

Utilities: $600/month

Insurance cost: $800/month

Total raw materials cost: $12,500

Raw materials cost per unit: $4

Salary expense: $40,000/month

Total Direct Labor cost: $17,187.50

Direct Labor cost per unit: $5.50

Marketing expense: $1500/month

Total Shipping cost: $1,562.50

Shipping Cost per unit: $0.5/unit

Depreciation: $6000/year

B. Using the same information above, how many units (total)
would the company need to sell in order to earn a profit of $15,000
in a month?

C. From the information provided on A and B, what is the
contribution margin? (stated as a dollar figure and as a
percentage)

D. Given the contribution margin, compared to a competitor whose
contribution margin is .35, does the above company have more or
less flexibility to offer discounts or to spend more money on
marketing in order to drive more revenue? Support your
answer.

Please answer parts A,B,C and D. Quick and correct answers will
be given high ratings.

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