Work the break-even on a school machine
Calculate monthly break-even units and margin of safety for a proposed vending placement.
A school offers a machine placement at 10% commission. Average vend price is $2.00. Average product cost is $0.78. Card fee averages $0.10 per sale. Monthly fixed cost allocation is $126. Break-even = fixed cost / contribution margin The common shortcut is to compare expected gross sales to fixed cost. That skips product cost, commission, and card fees, so it makes the placement look safer than it is. Find commission per vend $2.00 average vend price x 10% commission = $0.20 commission per item. Commission behaves like a variable cost because it is paid only when an item sells. Find…
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