The Handy Doll Manufacturing Company has the following information:The average doll sales price is $12, raw materials for a doll are $4, and ittakes 15 minutes to assemble a doll. Production labor is paid $8 per hour.Operating expenses are as follows: salaries, $2,500 per week; insurance,$1,200 per quarter; rent, $1,500 per month; and utilities, $800 per month.How many dolls must be sold per month to break even? How manydollars in sales does this represent? What is the contribution margin foreach doll sold?

Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 28E
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The Handy Doll Manufacturing Company has the following information:
The average doll sales price is $12, raw materials for a doll are $4, and it
takes 15 minutes to assemble a doll. Production labor is paid $8 per hour.
Operating expenses are as follows: salaries, $2,500 per week; insurance,
$1,200 per quarter; rent, $1,500 per month; and utilities, $800 per month.
How many dolls must be sold per month to break even? How many
dollars in sales does this represent? What is the contribution margin for
each doll sold?

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