Surfer Tom is going to sell his custom surfboards. He was able to rent a garage from his Uncle Ed for $1,200 a month, which includes utilities. He anticipates being able to sell his boards for $500 each. The raw materials (resin, foam, etc.) will cost an average of $200 for each board, and he plans to spend $60 per board to advertise them to local surfers. Assuming these are all the costs and revenues, what will be Surfer Tom’s monthly break-even point in units? Does this seem like a reasonable amount for him to produce and sell every month? Please show your calculations.

Answer:5 surfboards.Yes, it is a reasonable amount that can be produced and sold every month.Step-by-step explanation:Rent expense  =  $ (1200)Price of Board  = $ 500Cost of raw materials per board  = $200Advertisement cost per board =   $ 60Let  break even quantity of surfboard = y At break even, total cost = total revenue ------------------------- (1)Total cost per month = 1200 + 200y +60y                  = 1200 + 260y--------------------------------------------------- (2)Total Revenue per month  = 500y----------------------------------------(3)Equating (2) and (3) we have :1200 +260y = 500y500-260y = 1200240y = 1200y = 1200/240y = 5 surfboards