Question

For the following, perform a break-even analysis showing computation of the

a. contribution margin

b. contribution rate

c. break-even point in units

d. break-even point in dollars

Mike is considering working for Part-Time Painters. He would operate as an independent

painter, but the jobs would be given to him by the company. In the company’s

advertisement, $120 would be charged for each room painted. The painter would then get

80% of the amount billed. For each job the painter would supply paint and brushes, at a

cost of 40$. Each painter must have his or her own ladders, drop cloths, and other tools, at

a cost of $820.​

Answer 1

Break even at 15 units  at 1420$  amount  (spent) or 1440$ Earned

Step-by-step explanation:

Fixed Cost  = $820

Variable Cost = $40 per room Painted

Payment Per room  = (80/100) * 120  = $ 96

let say N is the number of units for break even point

then 96 N  = 820  + 40N

=> 56N  =  820

=> N = 14.64

=> N = 15  rooms

820  + 40N = 820 + 40*15 = 1420$

96 * 15  =  1440$

Units         FC         VC          TC          Earning

0               820        0           820        0

1                820        40          860         96

2               820        80          900        192

3               820        120          940       188

4               820        160          980        284

14            820        560          1380        1344

15            820        600          1420        1440

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