Question

a carpenter who makes three produce chairs tables beds using a high quality wood and sells them for a high quality margin. knowing that:

- a chair costs 85 and sells for 225, a table costs 120 and and sells for 250 and a bed costs 95 and sells for 280.

-the demand on chairs is 50%, on tables is 35% and on beds is 15% of the total sales.

-he pays 18000 a year for renting the workshop.

-he pays 12000 a year for salaries.

Answer the following in details

1-Find how many chairs, tables and beds He needs to sell in a year to breakeven?

2-Find how many chairs, tables and beds He needs to sell in a year to make 15000 in profit?

3-If he finds a new workshop that will reduce his rent to 10000 a year, what would the breakeven be?

Answer 1

1. Find how many chairs, tables and beds He needs to sell in a year to breakeven? Determination of the Weighted Contribution: Particulars Chairs Tables Beds Selling Price Less:Variable Cost 225.00 $ (85.00) $(120.00) $ 140.00 $ 250.00 $ $ 280.00 (95.00) 130.00 $ Contribution 185.00 Weights Weighted Contribution 35% 50% 15% 143.25 Fixed Costs $ Particulars Rent of Workshop Salaries $ 18,000 $ 12,000 30,000 Total Determination of the Break-Even Point Particulars $ Fixed Costs Weighted Contribution per Unit 30,000 143 Break-Even Point (In Units) Formula Fixed Costs / Contribution per Unit 209 Units Determination of Chairs, Tables and Beds at Break-Even Point Particulars Chairs Tables Beds Weights #of Units 50.00% 35.00% 15.00% 104.71 73.30 31.41

Check Break-Even Point is a situation where the company earns no profit or incurs no loss. $ Particulars Contribution - Chairs - Tables - Beds Total Contribution Less : Fixed Costs Net Profit This is due to rounding off differences of Units. $ 14,700 $ 9,490 $ 5,735 $ 29,925 (30,000) (75) $ Conclusion Therefore, to Break-Even, the carpenter shall produce 105 Chairs, 73 Tables and 31 Beds. 2. Find how many chairs, tables and beds He needs to sell in a year to make $ 15,000 in profit? If the carpenter needs to earn the profit of $ 15,000, then he needs to earn a contribution of $ 45,000. $ Contribution needs to earn 45,000 $ Weighted Contribution per Unit Weighted No. of Units 143 314 Units Determination of Chairs, Tables and Beds at Break-Even Point Particulars Chairs Tables Beds 50.00% Weights #of Units 35.00% 15.00% 157.07 109.95 47.12

Check Break-Even Point is a situation where the company earns no profit or incurs no loss $ Particulars Contribution - Chairs - Tables - Beds Total Contribution Less Fixed Costs Net Profit This is due to rounding off differences of Units. $ 21,980 14,300 8,695 $ 44,975 (30,000) 14,975 Conclusion Therefore, to earn an amount of $ 15,000 as profit, the carpenter shall produce 157 Chairs, 110 Tables and 47 Beds. 3. If he finds a new workshop that will reduce his rent to 10000 a year, what would the breakeven be? Fixed Costs: $ 10,000 $ Particulars Rent of Workshop Salaries 12,000 $ Total 22,000 Determination of the Break-Even Point $ $ Particulars Fixed Costs Weighted Contribution per Unit 22,000 143 Break-Even Point (In Units) Formula Fixed Costs / Contribution per Unit 154 Units

Determination of Chairs, Tables and Beds at Break-Even Point Chairs Particulars Tables Beds Weights #of Units 50.00% 35.00% 15.00% 76.79 53.75 23.04 Check Break-Even Point is a situation where the company earns no profit or incurs no loss. $ Particulars Contribution - Chairs - Tables - Beds Total Contribution Less: Fixed Costs Net Profit* This is due to rounding off differences of Units. $ 10,780 7,020 4,255 $ 22,055 (22,000) 55 Conclusion Therefore, to Break-Even, the carpenter shall produce 77 Chairs, 54 Tables and 23 Beds.