Reference no: EM133526961

Promotion and other costs

So, let's round-up and just call the break-even quantity 3377 chocolate oat milks. Does that mean that you keep the full $9 as profit for every chocolate oat milk after 3377 have been sold? Sadly, no.

First, you have to cover the variable cost for each chocolate oat milk ($Answer per chocolate oat milk) (calculate to two decimal points), which means you make just:

$9.00 - $Answer = $Answer per chocolate oat milk you sell (after you've surpassed the break-even point). (Calculate to two decimal points).

Second, our simple break-even example did not include all of the costs. For example, the IRD will want their tax. After you've locked down the production costs and the pricing, you will need to invest in promotion and distribution of the chocolate oat milks. You'll also probably want to cover your time (i.e., pay yourself) and add some profit into the total fixed costs. For instance, if you wanted to earn a profit of $600 each month, then you would need to add that to the fixed costs of $Answer.00 of the factory including employee wages.