BREAKEVEN WORKSHEET

1. Wanda wants to open a Health Food Store. She will pay rent of $1,500 per month, utilities of $500,
insurance of $100 per month, and payroll of $1,250. She estimates that her cost of goods will be
approximately 65 percent of sales. Wanda would like to make $2,000 a month for herself.
a) What is Wanda’s contribution margin?
b) How much does she need in monthly sales to break even?

c) How much does she need in monthly sales to make a profit of $2,000?

2. Woody's Widget Shop has the following information: The average widget has a sales price of $18;
raw materials for the widget are $4, and it takes 30 minutes to assemble one widget. Production labor
is paid $8 per hour. Operating expenses are as follows: salaries, $2,500 per week; insurance, $1,200
per quarter; rent, $3,000 per month and utilities, $1,000 per month.
a) How many widgets must be sold each month in order to break even?

b) How many dollars in sales does this represent?

c) What is the contribution margin for each widget sold?
d) If the goal is to make $100,000 profit per month, how many widgets will have to be sold?

3. You want to open up a custom skate board shop. You can sell each skate board for $160. It takes 3
hours to make each skate board. Each skate board maker earns $25 per hour. Each skate board costs
$15 in raw materials. You estimate that your fixed costs are $20,000 per month.
a) What is the contribution margin?

b) How many skate boards must be sold each month in order to break even?
c) What is the breakeven dollar amount?

d) How many skate boards must be sold to earn a $10,000 profit each month?
e) What is your total monthly revenue if you want to earn a profit of $8,000?