1. Roman and Clive have a plan to manufacture barbeque grills. They are writing their business plan for RC Grills in order to get investors and have put together the following costs:

Rent: $10,000/month

Packaging: $7 per grill

Equipment: $75,000

Staff Salaries: $12,000/month

Assembly and manufacturing labor: $16/hour

Raw materials: $100/grill

Utilities: $1,000/month

Outsourced painting: $30/grill

Insurance: $5,000/year

Scrap rate on raw materials and packaging: 1%

Time to manufacture and assemble 1 grill: 90 minutes

a. What are RC Grills fixed costs?

b. What are RC Grills total costs?

c. Comparable grills are priced at $300. If RC Grills matches that price and hopes to breakeven their first year, how many do they need to make and sell?

d. Assuming their workers work a typical 40 hours work week and are allowed three weeks off for vacation and holidays, how many assemblers must they hire?

e. Clive discovers that if they add a rotisserie unit, labor increases to 2 hours each, the cost of the rotisserie unit is another $20 and the sales price goes to $350. There are no additional scrap cost as defective units may be returned to the manufacturer, nor are there any additional equipment costs. Should they add this unit?