How many tools do you need to sell each month


Your Fixed Costs (FC) for running your plant are $1,300,000 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 The Tool, shipping, promotional programs, and other variable costs. These Variable Costs (VC) average $1,634,000 per month.

Your plant is able to produce 76,000 Tools each month (30 days per month).

Your price to your wholesaler distributor is $71.25. The retailer's price (e.g., Best Buy) from the wholesale distributor is $94.70. Your suggested list price for consumers for The Tool at the retail store, e.g., Best Buy, is $129.99.

What is your Unit FC per Tool?

Your Unit VC per Tool?

How many Tools do you need to sell each month to "break even"?

 

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Accounting Basics: How many tools do you need to sell each month
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