FIXED:
Rent - $500 / month
Utilities - $500 / month
Employee Salary / Wages - $400 / month
Insurance $100 / month
Equipment - $200 (just once)
TOTAL FIXED - $1700 (1st month)
- $1500 ( every month afterwards)
VARIABLE:
Products to sell - $15 / unit
Employee Commission - $5 / unit
TOTAL VARIABLE - $20 / unit
how many units does he need to sell to break even?
What is your markup if you price your product to sell at $70.
Markup is $50 (profit per unit)
$1700 is total fixed cost.
How many units do you need to sell to break even?
Total Fixed Cost / (Price - Total Variable Cost) =
Total Fixed Cost / Markup =
$1700 / $50 = 34 units. Need to sell 34 units to break even at price of $70.
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Let's say that instead we want to price the product at $45.
What is our markup? $45 - $20 = $25.
What is our Breakeven?
$1700 / $25 = 68 units. Need to sell 68 units to break even at a price of $45.
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