Lorne is considering working for Part-Time Painters. He would operate as an independent painter, but the jobs would be given to him by the company. In the company’s advertisements, $100 would be charged for each room painted. The painter would then receive 80% of the amount billed. For each job, the painter would supply paint and brushes, at a cost of $38. Each painter must have his or her own ladders, drop cloths, and other tools, at a cost of $720.
For each of the following, perform a break-even analysis showing computation of the
(a) Contribution margin;
(b) Contribution rate;
(c) Break-even point in units;
(d) Break-even point in sales dollars.