During a Skype session with Jordan and Taylor, you mention that your current cost model in accounting is break-even analysis. They are not following your explanation, but they say they will swing by with some brownies for a discussion. More brownies! This is paying off, except for those extra pounds.
Selling price to Yumminess at $10 per tin. The cost is $8 per tin, which includes $6 of direct material and $1.50 of direct labor. Annual manufacturing overhead is estimated at $100,000 for the expected sales of 200,000 tins. Operating expenses are projected to be $80,000 annually.
After looking over the costs for manufacturing overhead and operating expenses, you approximate that 85% of manufacturing overhead and 20% of operating expenses are variable costs.
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