Woody's Widget Shop has the following information: The average widget has a sales price of $18; raw materials for the widget are $4, and it takes 30 minutes to assemble one widget. Production labor is paid $8 per hour. Operating expenses are as follows: 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 will have to be sold?

  • CreatedJuly 31, 2015
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