Assignment:
Question 1. You are going to open a business making custom cabinets. You can sell each cabinet for $80. It takes a cabinetmaker approximately 45 minutes to make one cabinet. Each cabinetmaker works an 8-hour day earning $18 per hour. Each cabinet uses $25 in raw materials. You usually produce cabinets 20 days a month and can employ two cabinetmakers. You estimate that your fixed costs are $5,000 per month.
- What is your contribution margin?
- How many cabinets must you make each month to break even?
- What is your total monthly revenue if you want to earn a $2,000 profit?