What is your contribution margin

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Reference no: EM133373430

Question 1. James builds brick walls for custom homes. His annual sales are approximately $300,000, and his net income is $18,000. He has assets of $100,000 invested in this business. Tom sells window shades. His annual sales are approximately $900,000, and his net income is $27,000. He has assets of $150.000 invested in his business.

a. Compute the net profit margin for both James and Tom. ?
b. Compute the asset turnover for both James and Tom.
c. Compare the profitability of these two firms, and discuss the similarities and differences. (provide the explanation in detail)

Question 2) You are going to open a business making custom cabinets. You can sell each cabinet for $80. It takes a cabinetmaker approximately 45 minutes to make one cabinet. Each cabinetmaker works an 8-hour day earning $18 per
hour. Each cabinet uses $25 in raw materials. You usually produce cabinets 20 days a month and can employ two cabinetmakers. You estimate that your fixed costs are $5,000 per month.

a. What is your contribution margin?
b. How many cabinets must you make each month to break even?
c. What is your total monthly revenue if you want to earn a $2,000 profit?
d. Construct a break-even chart for the custom cabinet firm.

Reference no: EM133373430

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