Question

# Cranberry Wood Products Inc. spends an average of \$9.30 in labor and \$12.60 in materials on...

Cranberry Wood Products Inc. spends an average of \$9.30 in labor and \$12.60 in materials on every unit it sells. Sales commissions and shipping amount to another \$3.10. All other costs are fixed and add up to \$149,000 per month. The average unit sells for \$32.00.

1. What is Cranberry's contribution? Round the answer to two decimal places.
\$

What is Cranberry's contribution margin? Round the answer to two decimal places.
%
2. What is the firm's breakeven point in units? Round the answer to the nearest whole number.
units
3. Calculate the dollar breakeven point. Do not round intermediate calculations. Round the answer to the nearest whole dollar.
\$
4. Sketch the breakeven diagram.

a. Contribution per unit = Sales Price - Variable Price =

 Selling Price 32 Variable Costs Labor -9.3 Materials -12.6 Sales Commission & Shipping -3.1 Contribution per Unit 7.0

b. Breakeven Point in Units = Fixed Costs / Contribution per unit = 149000 / 7 = 21285.7 = 21286 Units

c. Dollar Breakeven point = 21286 * 32 = 681,152 \$

d. Break even Graph

 Units Sold Contribution Fixed Costs Profit / (Loss) 15000 105000 149000 -44000 18000 126000 149000 -23000 21285.71429 149000 149000 0 24000 168000 149000 19000 26000 182000 149000 33000

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