The Last Outpost is a tourist stop in a western resort community. Kerry Yost, the owner of the shop, sells hand-woven blankets for an average price of $30 per blanket. Kerry buys the blankets from weavers at an average cost of $21. In addition, he has selling expenses of $3 per blanket. Kerry rents the building for $300 per month and pays one employee a fixed salary of $500 per month.

1. Determine the number of blankets Kerry must sell to break even.
2. Determine the number of blankets Kerry must sell to generate a profit of $1,000 per month.
3. Assume that Kerry can produce and sell his own blankets at a total variable cost of $16 per blanket, but that he would need to hire one additional employee at a monthly salary of $600.
a. Determine the number of blankets Kerry must sell to break even.
b. Determine the number of blankets Kerry must sell to generate a profit of $1,000 per month.

Solution Preview

Contribution Margin per blanket= Selling Price - (Cost of selling)= 30- (21+ 3)= $6 per blanket

Fixed Costs= 300+ 500= $800

1. Determine the number of blankets Kerry must sell to break even.

Solution: Total Fixed cost/ contribution Margin= 800/6= 133.33 or 134 ...

Solution Summary

All parts of the question are answered in clear, concise calculations with a few words to clarify.

... b. What number of visits is required to break even? ... the P&L statement, and determines the breakeven point, profits... General Hospital, a not-for-profit acute care ...

... d. Compute the budgeted monthly profit if volume rises ... relationship between price, costs and break-even points in ... margin ratio, fixed costs, breakeven in units ...

... c.Which provider needs the higher volume to break even? ... What is its breakeven point? c. What volume is required to provide a pretax profit of $100,000? ...

... i) Compute the company's current break-even point in units ... i Breakeven in sales: fixed costs = RM620,000 ... ii target profit: fixed costs + target profit = RM755 ...

... the same, what would be the new breakeven point in ... be sold in order to meet this profit goal? ... I have determined that the current break-even point is ($180,000 ...

Break-Even and Target Profit. Break-Even and Target Profit. ... This solution illustrates how to find the break-even point and how to determine the target profit. ...

... to break even? What is the expected profit if the product is carried? What is the expected probability that this product will be profitable? Breakeven (units ...

... target profit b4 tax = $ 350,000 = 58,333 cm per unit $ 6.00. Post tax breakeven is no different from break even because there is no tax on zero profits. ...

Cost Volume Profit analysis, break even, margin of safety, net. Cost Volume profit. ... The cost volume profit analysis, break even and margin of safety is examined. ...

... have needed to sell to produce a profit of $12,000 ... units would the company have needed to sell to break even? ... Ratio 2) Then we will find out Breakeven by Fixed ...