A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that now exists. The primary location being considered will have fixed costs of $9,200 per month and variable cost of 70 cents per unit produced. Each item is sold to retailers at a price that averages 90 cents.
What volume per month is required in order to break even?
What profit would be realized on a monthly volume of 61,000 units? 87,000 units?
What volume is needed to obtain a profit of 16,000 per month?
Plot the break-even chart showing fixed cost, variable cost, total cost, total revenue lines, and the break-even point. Use Excel to plot the break-even chart.