You are going to open a business making custom cabinets. You can sell each cabinet for $80.

Question:

You are going to open a business making custom cabinets. You can sell each cabinet for $80. It takes a cabinet maker approximately 45 minutes to make one cabinet. Each cabinet maker works an eight-hour day, earning $18 per hour. Each cabinet will use $25 in raw materials. You usually produce cabinets 20 days a month and can employ two cabinet makers. You estimate that your fixed costs are $5,000 per month.
a. What is your ?
b. How many cabinets must you make each month to break even?
c. What is your total monthly revenue if you want to earn a $2,000 profit?
d. Construct a break-even chart for the custom cabinet firm.
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...