[crofire2]

If I have the average cost of an item, the average price of an item, the selling expense of the item, the building rent for the company and a fixed salary for the employee, how can I find out how many of the item I would need to sell in order to break even? I also need to figure out how many items I will need to sell to generate a profit of $1,000 per months?


Thanks for any help

[CaptainForest]

Average Price of Item
Average Cost of Item
Selling Expense of Item
Fixed Costs: Building Rent, Fixed Salary

Break even unit?
Break even to earn profit of $1,000?

Let's say we sell our product for $100. It costs us $20 to make it with a $5 selling expense. Building rent is $1,200 per month and fixed salary is $3,000 per month.

Selling 100x
Less Variable Cost (20+5) 25x
Contribution Margin (100-25) 75x
Less Fixed Costs (1,200+3,000) 4,200
Net Income = 0

Therefore, the break even point per month for a 0 Net Income is:
75x – 4,200 = 0
75x = 4,200
x = 56 units


For a profit of $1,000 per month?
Contribution Margin (100-25) 75x
Less Fixed Costs (1,200+3,000) 4,200
Net Income = 1,000

75x – 4,200 = 1,000
75x = 5,200
x = 69.3 (therefore, 70)