Gloria Meehan is considering opening a window tinting business. She estimates that the following costs will incurred during the first year of operations: Rent, $3,000; Depreciation on equipment, $5,000; Wages, $3,500 (based on 500 windows tinted in the previous year); tinting, $3 per square foot. Each window tinted takes 4 square feet of tint. Gloria anticipates that she will tint each window for a retail price of $35 each.
Instruction:
A. Determine variable costs per unit and total fixed cost.
B. Determine the break-even point in number of windows to be tinted.
C. How many windows need to be tinted to earn income of $14,000?