Patricia hasjust graduated university and is thinking about opening Surf Shop to sell surfboards. Basic surfboards are manufactured by a local company and the cost
Patricia hasjust graduated university and is thinking about opening "Surf Shop" to sell surfboards. Basic surfboards are manufactured by a local company and the cost to purchase each surfboard is $500. Patricia is quite artistically talented and plans to paint a scene on each surfboard so that each surfboard is unique. The estimated cost for paint and supplies is $50 per unit and the direct labor cost to do this is zero. Pat estimates that each unique surfboard can sell for $1,000.00. Other costs include rent for the shop of $34,000 annually and advertising of $26,000 annually. Patricia plans to hire one salesperson who will be paid a 15% sales commission for every surfboard that is sold. Required: You must show all your calculations in order to get marks. If you provide the answer only you will not receive any marks. 1. What is the contribution margin per unit in $$. 2. What is the contribution margin ratio? 3. What is the break even point in units? 4. What is the break -even point in sales dollars? 5. How many units need to be sold to earn $ 180,000 6. If Surf Shop is operating at 10 units below break-even what is the total loss? 7. If Surf Shop sells 500 surfboards what is the expected profit
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