Phil anticipates paying monthly rent of $700 for space in a local warehouse where the Pedal Pusher product will be designed, developed, and tested. Utility expenses for power and heat are estimated at $150 per month. Phil plans to “draw down” a salary of $1,000 per month. Materials needed to build and test an initial prototype product are expected to cost $9,500. In addition, each redesign and new prototype will require an additional $4,500 investment. Phil anticipates that before the final Pedal Pusher is ready for market at the end of six months, the initial plus two more prototypes will need to be built and tested. Costs associated with test marketing the Pedal Pusher are estimated at $7,000. HINT: create a listing of total expenses or USES for required capital
What is your unit contribution or profit margin? HINT: Per unit, calculate total sales minus total expenses = profit per item. Use profit margin ratio formula (net income by net sales)