Metal Foundry Break-Even Analysis: About $127K Monthly Revenue

Fixed costs $104.8K Monthly fixed base

Contribution margin 82% After variable costs

Break-even revenue $127K Monthly breakeven target

Break-even timing Month 1 First breakeven month

Break-even calculator

Test monthly revenue, variable expenses, and fixed costs against break-even for a metal foundry.

Lean Base Full

Monthly revenue Revenue sets how much margin is left to cover fixed costs. $ Lower sales Higher sales Variable expenses These are direct metal, labor, energy, and shipping costs that rise with output. $ Lower direct costs Higher direct costs

Money available to cover fixed costs $894,408 $1,040,792 revenue - $146,384 variable expenses

Margin ratio

86%

Covers fixed costs

Yes

Fixed monthly costs This is the monthly cost base contribution margin must cover. $ Lower overhead Higher overhead

Break-even chart Revenue Total costs

Which metal foundry expenses are fixed, variable, semi-variable, or semi-fixed for break-even?

Cost classification

Break-even gets reliable only when monthly overhead is kept separate from unit and revenue-linked expenses. Misclassifying capacity steps as variable can make Month 1 break-even look safer than it is.

Expense	Cost	Break-Even Treatment	Common Mistake
Foundry Facility Lease	Fixed	Include $25,000 per month in fixed overhead from Month 1 through Month 60.	Spreading rent across units and hiding the monthly cash burden.
ERP Software Licensing	Fixed	Include $2,500 per month as recurring enterprise resource planning software overhead.	Mixing recurring software fees with system implementation capital spending.
Raw Metal Alloy	Variable	Apply per unit: $70 Valve Body, $100 Pump Housing, $30 Gear Blank, $45 Bracket Heavy, and $60 Flange Custom.	Using one blended metal rate across very different parts.
Direct Foundry Labor	Variable	Apply per unit: $35 Valve Body, $50 Pump Housing, $15 Gear Blank, $25 Bracket Heavy, and $30 Flange Custom.	Treating all labor as fixed and overstating contribution margin.
Base Utilities and Melting Energy per Unit	Semi-variable	Model $10,000 per month as the base utility load, then add per-unit melting energy by product.	Putting all energy into fixed overhead despite heat-by-batch usage.
Sales Commissions	Variable	Apply to revenue, starting at 2.0% in the first year and declining to 1.5% by the fourth year.	Using a flat dollar amount when the expense moves with sales.
Shipping & Logistics	Variable	Apply to revenue, starting at 1.5% in the first year and declining to 1.0% by the fourth year.	Ignoring freight and delivery drag when volume scales.
Facility Maintenance Contract	Semi-fixed	Use $4,000 per month in the current range, then add step-ups when utilization or equipment coverage expands.	Assuming maintenance rises smoothly with each unit produced.

How does break-even shift from a lean launch to full capacity in this metal foundry?

Scenario table

Higher output spreads fixed plant costs across more revenue, so the cushion improves as volume rises. What this hides is that scrap yield, batch timing, and product mix can still move break-even fast.

Planning assumptions only; actual break-even will move with mix, scrap, throughput, and fixed-cost changes.

Scenario	Monthly Revenue	Variable Costs	Fixed Costs	CM Ratio	Operating Profit	Break-Even Signal
Year 1 lean launch mix	$501.7k	$87.8k	$104.8k	82.5%	$309.1k	Break-even clears in Month 1, but downtime or scrap can cut the cushion.
Year 3 base operating mix	$1.041M	$168.9k	$127.3k	83.8%	$744.6k	Healthy cushion; this is the best case for testing order mix and throughput.
Year 5 full-capacity mix	$1.558M	$240.6k	$132.3k	84.6%	$1.186M	Strong cushion; overhead absorption is doing most of the work here.

What breaks first if revenue softens or costs climb?

Stress test

The base plan clears break-even with room to spare: $5,017K of revenue versus $1,270K of break-even revenue. The main stress points are furnace downtime, scrap, overtime labor, energy spikes, and slow purchase orders.

Stress Case	Changed Assumption	Break-Even Revenue	Revenue Gap	Risk Signal
Current plan	No change.	$1,270K	$3,747K cushion	Wide cushion, but throughput still has to hold.
Revenue shortfall	Revenue falls 20% to $4,013K.	$1,270K	$2,743K cushion	Volume pressure trims the cushion, but break-even still clears.
Fixed-cost increase	Fixed overhead rises 15%.	$1,460K	$3,557K cushion	Lease, utilities, and salaried labor push break-even higher.
Margin pressure	Variable expense load rises 5 points.	$1,352K	$3,665K cushion	Energy, scrap, and overtime can eat the margin fast.
Combined pressure	Revenue falls 20%, fixed costs rise 15%, and variable load rises 5 points.	$1,554K	$3,463K cushion	Downtime and slow purchase orders can stack up fast.

What should a founder verify before signing the lease and ordering major equipment for a metal foundry?

Founder checklist

Don’t commit to the lease or furnace until the site works, the first-year order base is real, and the cash plan covers the build. Here’s the quick math: 7,000 units, $6.02M revenue, $675K Year 1 payroll, $48.5K monthly fixed costs, and a -$159K cash trough in Month 6.

1Facility fit$48.5K/mo

Verify zoning, ventilation, environmental controls, power supply, and furnace installation at the site before you sign, because a bad location locks in fixed cost with no output.

2Order base7,000 units

Confirm the first-year order book can absorb 7,000 units and about $6.02M in revenue, since the plant only works if demand shows up early.

3Input supplyAlloy + binder

Lock in alloy, sand, binder, and finishing supply before ramp, because shortages stop the line and push labor and overhead onto idle hours.

4Unit margin$726/unit

Check that the product mix leaves about $726 of contribution per unit after direct metal, labor, energy, sand, finishing, commissions, and shipping so fixed cost gets covered.

5Payroll ramp$675K Y1

Staff to throughput, not hope: Year 1 payroll is $675K and rises to $1.005M by Year 5, so hiring ahead of orders will squeeze cash fast.

6Build timing$2.8M

Stage the furnace, molding, machining, lab, renovation, handling, workstations, and environmental systems spend against cash, since the model dips to -$159K in Month 6.