So here's the question that i have and i hope someone can help me with this because i am kind of stumped. MY main struggle is determining which is VC and which is FC.
John and Jack have opened a shop in Kelowna to build customized patio furniture. The projected selling price of a patio set will be $3,000. They estimate that the table will use twenty (20) board feet of lumber at a cost of $12 per board foot, $10 per table for hardware, and another $15 for custom finishing materials such as stain, varnish, or painting. Each patio set comes with four (4) chairs. Each chair will use six (6) board feet of lumber, $6 for hardware, and $10 for finishing materials. They estimate the labour time per table to be twenty-five (25) hours, and per chair, ten (10) hours for construction and finishing work. John found warehouse space that they can rent for $2,300 per month including heat. Other utilities will be $275 per month. Other required costs are insurance at $3,500 per year. They will pay themselves $20 per hour (treat this as a variable cost). They will pay a sales commission (based on selling price) of 4% per complete set sold. Jack estimates that they can build 125 sets per year.
i am asked to find....
1. How many patio sets must they construct to break-even? Calculate the break-even point in:
b. sales dollars.
Thanks in advance..