Short Case Focusing on Uncer Cost-Volume-Profit Analysis Cost function, breakeven, target profit to produce carved wooden clocks. He loves making living doing what he likes best cost $2.400 per month for rent plus anothe breakeven, target profit, business risk, bias, interpretation. Joe Davis is thinking about starting a company He loves making the clocks. He sees it as an opportunity to be his own boss, making a manufat w a 500 for the plans for the first clock, and he has already purchased new equipment costing $2,300 to clock i n clocks. He estimates that it will cost $15 in materials (wood, clock mechanism, and so on) to make each dides to build clocks full time, he will need to rent office and manufacturing space. Which he thinks would er month for rent plus another $150 ani v ar y billse would perform or the acturing and run the office, and he would like to pay himself a salary of $3.000 per month so that he would have to live on. Because he does not want to take time away from manufacturing to sell the clocks, he plans to two salespeople at a base salary of $1,100 each per month plus a commission of 58 per cock de plans to sell each clock for $200. He believes that he can sell 300 clocks in December for Christmas, but he is sure what the sales will be during the rest of the year. However, he is fairly sure that the clocks will be popular cause he has seen similar items as a sideline for several years. Overall, he is confident that he can pay all of his costs, pay himself, the monthly salary of $3,000 and earn at least 52,000 more than that per month tenore A Perform analyses to estima to be financial successful to be fi es to estimate the number of clocks loe would need to manufacture and sell each year for his business ist all of the costs described and l a te whether each cost is (a) a relevant fixed cost. (b) a relevant variable cost, or (C) NOT relevant to loe's decision Calculate the contribution margin er unit and the contribution margin ratio. 3. Calculate the annual breakeven point in units and in revenues. w many clocks would loe need to sell annually to earn $2,000 per month more than his salary? Identify uncertainties about the CVP calculations: 1. Identify possible costs for lon's business that he has not identified. List as many additional types of cost as You can. 2. Explain why Joe cannot know for sure how many clocks he will sell each year. In your explanation, identify as many risks as you can pose Joe asked for your advice. Use the information you learned from the preceding analyses to write a memo to Joe with your recommendations