A producer of pottery is considering the addition of a new plant to absorb the backlog of demand that exists. The primary location being considered will have fixed costs of $9,200 per month and variable costs of 70 cents per units 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?
Expert Answer
The margin for each item can be calculated as follows:
90 ¢ – 70 ¢ = 20 ¢
Converting it to dollars
OR
PayPal Gateway not configured
OR
PayPal Gateway not configured