Sunday, July 20, 2008

Wanda wants to open a health food store. She will pay rent 1500 per month, utilities 500, insurance 100 and pa

Wanda wants to open a health food store. She will pay rent 1500 per month, utilities 500, insurance 100 and pa
Wanda wants to open a health food store. She will pay rent 1500 per month, utilities 500, insurance 100 and payroll 1250. She estimates that her cost of goods will be 65% of sales. Wanda would like to make $2,000 a month for herself What is your contribution margin? How much does she need to make in monthly sales to break even? What is your total monthly revenue if you want to profit $2,000? Construct a break even chart for Wandaâ€™s health food store.
Small Business - 2 Answers
Random Answers, Critics, Comments, Opinions :
1 :
First , the goods as 65% of sales is a bogus assumption ( could easily be that goods exceed sales in the early days and when successful , are less than 25 % soooooo Bogus Assumption / No valid economic basis for this number ) At some point during operation however , 65% may be legit when doing a current analysis . . . So , at the point in business when product is running 65 % of sales . . . How much to break even ? If product is 65% , then the other costs are 35% Add up the other costs . . . ( $3350 ) Break even means 35 % of sales = $3350 Product costs + operating costs = break even .35 ( sales ) = 3350 sales = 3350 / .35 Sales would have to be about $9571 to break even . Revenue necessary for profit ? Add the $2K to the break even amount . >
2 :
Sounds like a homework question to me.