A rotary cutting tool is provided for cutting an opening in a sheet of material (e.g., drywall) around a pre-installed item (e.g., an electrical box). The cutting tool may include a shaft, at least one cutter, a guide tip and a shoulder formed by a lower edge of the cutter adjacent the guide tip. The shoulder may have a width that corresponds to the width of a wall of the pre-installed item. The width of the shoulder may be equal to the width of the wall, or it may be slightly greater than the width of the wall. The guide tip may include a bearing to prevent marring of the wall of the item when the guide tip is rotating and in contact with the wall. An adjustable collar and corresponding bearing may also be disposed around the shaft for controlling a preferred cutting depth of the cutter. The cutting tool may be engaged with any suitable rotary tool, including one having an adjustable table for controlling a preferred cutting depth of the cutter. Related methods of using a cutting tool to cut an opening for receiving the item or box are also provided. The rotating guide tip may be moved into contact with the wall and the shoulder may be positioned above and/or in contact with an upper edge of the wall. The cutting tool is then moved around the wall while rotating to cut an opening in the material through which the item or box may be positioned.