Roman & Clive Grills

Roman and Clive have a plan to manufacture barbeque grills. They are writing their business plan for Roman & Clive 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 variable costs per unit?

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? (Breakeven point is where Fixed costs + variable costs = revenue, meaning the point where revenue covers exactly both fixed and variable costs with no profit.)

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?