Week 6 Break Even.doc ENTR315 Break-Even ENTR315 D001 Break-Even Custom Cabinet B

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Week 6 Break Even.doc ENTR315 Break-Even ENTR315 D001 Break-Even Custom Cabinet Business 1. You are going to open a business making custom cabinets. You can sell each cabinet for $80. It t... akes 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? The selling price minus the variable costs is called the contribution margin.  (Nickolas, 2020.) Contribution margin = price “ variable costs Contribution margin = 80 “ [25+(18*0.75) Contribution margin = 41.5 b. How many cabinets must you make each month to break even? Break Even (units) = fixed costs / (price “ variable costs) Break Even (units) = 5,000 / (80 “ 38.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [Show More]

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