Fixed and Variable Costs for specialty widgets
You have just become product manager for a line of specialty widgets. Your Fixed Costs (FC) for running your plant are $250,000 a month. This includes salaries, insurance, rent, amortized capitalization of equipment, etc.
Your Variable Costs (VC) per unit will, of course, vary. You have looked at your hourly salaries, your utilities usage, your raw materials used to make your widget, shipping, promotional programs, and other variable costs. These Variable Costs (VC) average $138,000 per month.
You production run of widgets averages 10,000 widgets in any given 30-day month.
Your selling price for the widget is $79.95 and you sell direct via the Internet.
What is your Unit FC per widget? Your Unit VC per widget? Unit Cost (UC) per widget? What is your breakeven (BE) point?