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Woody’s widget shop has the following information: The average widget has a sales price of $18; raw materials for the widget are $4; it takes 30 minutes to assemble one widget; and production labor
Woody’s widget shop has the following information: The average widget has a sales price of $18; raw materials for the widget are $4; it takes 30 minutes to assemble one widget; and production labor is paid $8 per hour. Operating expenses are as follow: salaries, $2,500 per week; insurance, $1,200 per quarter; rent, $3,000 per month; and utilities, $1,000 per month.
a. How many widgets must be sold each month in order to break even?
b. How many dollars in sales does this represent?
c. what is the contribution margin for each widget sold?
d. If the goal is to make $100,000 profit per month, how many widgets must be sold?
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********* ****** shop has *** ********* information: *** ******* widget has * ***** ***** ** **** raw ********* *** *** widget *** $4; it ***** 30 ******* to ******** one ******* *** production labor ** **** ** *** hour Operating expenses *** ** ******* salaries ***** *** week; insurance ***** *** ******** **** ***** *** ****** *** ********* ***** per ****** *** **** ******* **** ** **** **** ***** in ***** ** break even? Answer: Let *** ****** ** widget ** X Unit contribution ****** * Average sales ***** *** ******** ******* * $18 *** *** * ***** * ********* ***** * ***** + ***** + ***** * $1000 = $7700 Number ** widgets * Fixed costs/Unit ************ ******** * ********** = ****** ~ **** ******** *** many ******* in ***** does **** ************************** ** dollars * ******** * ********* **** ** *** ************ ****** *** **** ****** ******************** ************ ****** * ******* sales ***** *** Variable ******* * *** – ($4 + ***** * ***** ** *** goal ** ** **** ******* ****** per ***** *** **** ******* **** ** sold? Answer: Profit * ***** *** Variable ***** – ***** ************** = *** – *** – 7700 107700 * 6x x * 107700/6 * ***** *******
