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Assignment 6

The document contains production data for a chemical plant including: - Production volume of 48 kton per year - Market price of $3 per kton - Variable costs of $2.3911 per kton - Fixed costs of $12.0192 million per year It also shows how profits increase with higher production volumes, peaking at $17.208 million profit at 100% production capacity. A simple payback period analysis estimates it would take 6.4 years to recover the $110 million investment costs.

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Chan Jiun Haur
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54 views4 pages

Assignment 6

The document contains production data for a chemical plant including: - Production volume of 48 kton per year - Market price of $3 per kton - Variable costs of $2.3911 per kton - Fixed costs of $12.0192 million per year It also shows how profits increase with higher production volumes, peaking at $17.208 million profit at 100% production capacity. A simple payback period analysis estimates it would take 6.4 years to recover the $110 million investment costs.

Uploaded by

Chan Jiun Haur
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLS, PDF, TXT or read online on Scribd
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Production

volume/
ktonmillion / kton) 48
Market price
of PB (US$
3
Variable
cost
(US$
million/
kton)
2.3911
Fixed cost (US$ million)
12.0192

48
3
2.3911
12.0192

48
3
2.3911
12.0192

48
3
2.3911
12.0192

48
3
2.3911
12.0192

48
3
2.3911
12.0192

48
3
2.3911
12.0192

48
3
2.3911
12.0192

48
3
2.3911
12.0192

48
3
2.3911
12.0192

48
3
2.3911
12.0192

Table 2
Running Capacity (%)

10

20

30

40

50

60

70

80

90

100

Production volume (kTon)


Sales Revenue (US$ million)

0
0

4.8
14.4

9.6
28.8

14.4
43.2

19.2
57.6

24
72

28.8
86.4

33.6
100.8

38.4
115.2

43.2
129.6

48
144

Variable cost (US$ million)


Fixed cost (US$ million)
Total cost (US$ million)

0.000
12.019
12.019

11.477
12.019
23.496

22.955
12.019
34.974

34.432
12.019
46.451

45.909
12.019
57.928

57.386
12.019
69.406

68.864
12.019
80.883

80.341
12.019
92.360

91.818
12.019
103.837

103.296
12.019
115.315

114.773
12.019
126.792

Profit/ loss (US$ million)

-12.019

-9.096

-6.174

-3.251

-0.328

2.594

5.517

8.440

11.363

14.285

17.208

20

ITEMS
Raw material cost
Utilities cost
Catalyst cost
Total Variable cost

US$/ Ton US$/ Ton


2020.0
315.1
56.0
2391.1

%
76.47
11.93
2.12

Profit/ US$ million

Table 1

15

y = 0.6089x - 12.019

10
5

0
-5 0

10

20

30

40

50

-10

PB production cost

146.3
104.1

-15

5.5
3.9

2641.5

Production volume/ kTon

100

250.4
100.0

Investment US$
million

Manufacturing Expenses
Finance & Other expenses
Total Fixed cost

Payback Period

50
y = 17.208x - 110
0
0

-50
-100
-150

Year

10

80

0
1
2
3
4
5
6
7
8
9
10

-110
-92.792
-75.584
-58.376
-41.168
-23.96
-6.752
10.456
27.664
44.872
62.08

Payback Period

60
Investment US$ million

17.208
17.208
17.208
17.208
17.208
17.208
17.208
17.208
17.208
17.208
17.208

40
y = 17.208x

20
0
-20
-40
-60
-80
-100
-120

Payback Period
y = 17.208x - 110

Year

10

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