Steve is opening a small wood shop to build custom mailboxes. He has the following costs:
Fixed cost: $3,000 a month
Wages for two assistants who work 40 hours a week,
40 weeks a year earning $12 an hour
Material: $10 per box
Handling: $1.00 per box
If he sells his boxes at $30 each, calculate the shop's:
(a) Contribution margin
(b) Break-even quantity
(c) Break-even revenue
(d) Break-even quantity and revenue if he wants to make $5,000 in profit
Also draw the break-even graph.