If the manufacturing cost of the 2 parts of the knife is $15.00 per shot and maximum shots per machine is 175,000 per year, then, if we apply Steipp's formula of 80 grams net per shot at $100 per shot, then, in case of a maximum run above, the total revenue (175,000) x (100-15= 85) 0r 14,875,000 Dollars gross revenues, which certainly falls within the range of break-even.
If you used Darknight's calculations, you will be in error. since his calculations are only on the MATERIAL COSTS.
Now, the reality is that Miltner-Adams is not going to sell 175,000 knives this year. For one, Gorgol pointed out the maximum number of a single knife they sold was 50,000, and, I believe, was at a lower sales price.
Second, LQMT is due to receive another machine. This would theoretically allow a maximum annual production of (2 x 175,000 or) 350000 shots.
Third, I highly doubt that RSM would operate 3 shifts. In my opinion, at best, they will operate 2 shifts. In such case, annual capacity would be (2/3 x 350000)= 233,000 shots per 7 day production week. However, to be safe, I would schedule 90 percent of capacity to allow for downtime for maintenance and retooling each machine.
So I believe 2 machines will generate about 210,000 shots per year of production. I am guessing that at 80% of net product, we are looking at about USD 17 million in possible revenue with two machines operating two shifts.
Obviously, to do any serious large contracts, increased capacity (more machines) would be necessary.
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