Case Description

Jasper Company produces widgets that it sells for $62 each, and Joe Jasper, the owner, is contemplating several ideas to grow his business. He has brought his monthly operating budget to you and has asked you to analyze it for him.

Each unit requires hour of machine time and direct labor. Assembly workers are paid $20 per hour. The machinery is serviced on a regular schedule based on the number of hours each machine runs.

The spreadsheets needed with information is shown below

1. Prepare a break-even graph.
2. How many units would have to be sold to achieve an operating income of $20,000?

Factory utility costs for the prior year
	Machine hours	Utility cost
January	4,240	$ 3,350
February	4,310	3,500
March	5,630	4,200
April	5,260	4,150
May	4,910	3,850
June	4,790	3,700
July	5,120	4,250
August	5,380	4,300
September	4,830	3,750
October	5,470	4,350
November	5,180	4,100
December	4,430	3,650
Monthly budget for 10,000 units.
Administrative Salaries	$ 30,000
Advertising	15,000
Assembly labor	100,000
Building rent and janitorial costs (80% related to factory)	20,000
Equipment depreciation	18,000
Factory supplies	4,500
Factory utilities (requirement 1)	???
Insurance (60% related to factory)	8,000
Machine Maintenance	16,100
Material	335,000
Office supplies	2,400
Office utilities	1,200
Sales Commissions	18,600
Sales Salaries	20,000
Supervisors	12,000
Telephone and internet	1,500
	602,300

#1
Machine hours	Utility Cost
4240	3350
4310	3500
5630	4200
5260	4150
4910	3850
4790	3700
5120	4250
5380	4300
4830	3750
5470	4350
5180	4100
4430	3650