search

# You want to open up a custom skateboard shop You can sell each skate

Content type
User Generated
Rating
Showing Page:
1/2
You want to open up a custom skateboard shop. You can
sell each skateboard for \$ 160. It takes 3 hours to make
each skate board. Each skateboard maker earns \$25 per
hour. Each skateboard costs \$15 in raw materials. You
estimate that your fixed costs are \$ 20,000 per month.
What is the contribution margin? How many skateboards
must be sold each month in order to break even? What is
the break- even dollar amount? How many skateboard
must be sold to earn a \$ 10,000 profit each month? What
is your total monthly revenue if you want to earn a profit of
\$ 8,000?
Solution
a) contribution margin = sales - variable cost
=160 - (\$25 * 3hours + \$15)
= 160 - 90
= 70
b) Break even sale unit = fixed cost / sales price - variable
cost
=20000 / (160 - 90)
= 20000 / 70
=286 units (Approx 285.7)
c)Break even sale dollar amount = break even units * sale
price

Showing Page:
2/2

Unformatted Attachment Preview
You want to open up a custom skateboard shop. You can sell each skateboard for \$ 160. It takes 3 hours to make each skate board. Each skateboard maker earns \$25 per hour. Each skateboard costs \$15 in raw materials. You estimate that your fixed costs are \$ 20,000 per month. What is the contribution margin? How many skateboards must be sold each month in order to break even? What is the break- even dollar amount? How many skateboard must be sold to earn a \$ 10,000 profit each month? What is your total monthly revenue if you want to earn a profit of \$ 8,000? Solution a) contribution margin = sa ...
Purchase document to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

### Review

Anonymous
Really helpful material, saved me a great deal of time.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4