Part I. Breakeven analysis : Speciality Chocolate Company One-time Fixed
| Cost |
|
| Rent of Facility |
800,000 |
| Plant Maintenance |
300,000 |
| Advertising |
400,000 |
| Employees' salary |
400,000 |
| Insurance |
500,000 |
| Total Fixed Cost |
2,400,000 |
|
|
| Annual Variable Costs per box sold |
|
| Electricity |
3,200,000 |
| Cost of Packaging |
1,600,000 |
| Cost of Ingredients |
2,400,000 |
| Production Labor |
800,000 |
| Total Variable Cost |
8,000,000 |
|
|
| Price to Consumer Quantity Sold/Yr |
$10 1,000,000 |
Calculate total revenue for the company (Show work)
Calculate the margin for this company. (Write down the equation and solve the problem)
How many units (Chocolate boxes) must this company sell to breakeven? How many years will it take? Show your work.
Does this feel like a good business for your client to be in? Yes, No, or Unclear. Explain your reasoning for what constitutes a "good business."
Your employee tells you that the cost of building the factory for the company has lowered the margin for the product. Does this make sense? Why or why not?