Question

Sodresh Sundials manufactures large stone sundials. It costs $14.22 to produce a sundial, which can then be sold for $36.75. The following table shows Sodresh Sundials’s non-production overhead costs and sundials sold over a period of one year.

Month
Overhead ($)
Sold
Jan.
9,176
290
Feb.
7,510
329
Mar.
7,952
309
Apr.
7,071
288
May
8,942
303
Jun.
9,249
329
Jul.
7,813
400
Aug.
6,821
350
Sep.
9,382
382
Oct.
8,117
329
Nov.
9,018
425
Dec.
6,503
424

In how many months did Sodresh Sundials either break even or turn a profit?
a.
eleven
b.
six
c.
four
d.
one

Answer 1

Per unit contribution = 36.75 − 14.22 = 22.53.

Monthly profit = 22.53 × (sundials sold) − overhead. Calculating gives profits only in:
- July: 22.53×400 − 7,813 = 1,199
- August: 22.53×350 − 6,821 = 1,064.50
- November: 22.53×425 − 9,018 = 557.25
- December: 22.53×424 − 6,503 = 3,049.72

So 4 months. Answer: c. four.