question 3

1. Sue operates a gourmet coffee shop. She charges $1.60 for a cup of either coffee or tea. Her variable costs are $.80 and the fixed costs are $1000 per month. a) What is the contribution Margin? b) What is the break-even point in tea/coffee sold? Break even in revenue? c) What will be the profit or Loss at 1400 units sold? d) What will be the Profit or Loss at 800 units sold? e) What will be the increase in profit for every additional 30 units sold? 2. Keith operates a garage and charges $40 per hour. The variable costs are $15.00 per hour and the fixed costs are $3000 per month, which includes $800 withdrawal by the owner. Keith estimates that average time spent per job is 1 hour. a) What is the break-even point in jobs? Revenue? b) What will be the profit or loss at 200 jobs? c) What will be the profit or loss at 90 jobs? d) What will be the increase in profit for every additional 50 jobs? e) If the owner withdraws $1000 per month, what is the new break-even point? 3. The New Line Jeans Company sells jeans for $50.00 per pair. The costs are as follows: Labour Insurance Material $20.00/pair Jeans Costs: $1.25/pair jeans Rent S400/month $1200/year Salaries $700/month License $72/year Business a) What is the Contribution Margin? b) What is the break-even point in units? Revenue? c) What will be the Net Income at 42 jeans sold? 50 sold? d) If the Fixed Costs and the Variable Costs stay the same, what will be the break-even point if there is a decrease of $3.00 in the Selling Price of the jeans