Using breakdown formula, How many vehicles does eric need

Using breakdown formula

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Reference no: EM132140059

Using Breakdown formula solve this.

Eric wants to start a car detailing business but is unsure how many cars he will need to detail before making a profit. His cousin has offered to let him use a small section of his shop for only $350 per month. Eric is going to pay his friend $12/hour to help him. He has estimated his additional expenses to be the following: Start by assigning this list of expenses into fixed costs(FC) or variable costs( VC)

Insurance $150/month

His share of monthly utilities $120

Wax (will yield 10 cars) $16.00

Towels, soap, and other supplies $2.95/vehicle

Leasing of equipment $100/month

Marketing $135/month budgeted

He estimates that it will take him 4 hours to detail a vehicle if he has help from his friend.

He plans to charge $100 per vehicle.

Questions:

How many vehicles does eric need to detail each month to breakeven?

Eric is now considering leaving his full-time job to grow his car detailing business but does not want to lose his salary. If he decides to pay himself $1800 per month how many cars does he have to detail in a month now to breakeven?

Are these numbers attainable? Please explain. List two suggestions you could give eric that would affect his breakdown point

Reference no: EM132140059

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