Using your business idea, create an underlying cost structure. You may use reasonable estimates for various expenses.
Start-up expenses- To start my pizza company, I will need $2,000 for pizza oven, $7,500 for furniture, $15,000 for renovations and painting, and $5,000 for business/legal expenses.
Underlying cost structure –
Rent/utilities $2,500 per month, $30,000 per year
Office/marketing $1,250 per month, $15,000 per year
Corse staffing $10 per hour, 48 hours per week, 350 days per year = $168,000 per year
Raw food material $1.50 per pizza
Paper goods $.50 per pizza
Volume per day 50 pizzas, 350 days per yea r= 17,500 pizzas
Fixed costs- $213,000 per year
Variable costs- $2.00 per pizza X 17,500 pizzas = $35,000 per year
Total costs- $213,000 + $35,000 = $248,000
Volume- 17,500 pizzas
Price per pizza to break even = $248,000/17,500 = $14.17 per pizza