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    Break Even Analysis

    Uploaded by

    Amit Admune
    The document compares the total cost and total revenue of establishing a clock manufacturing facility in two locations: Noida and Pune. In Noida, the fixed cost is Rs. 1.8 million and variable cost per clock is Rs. 40. In Pune, the fixed cost is Rs. 2 million and variable cost per clock is Rs. 30. Clocks manufactured in Pune can be sold for Rs. 120 each compared to Rs. 100 each if manufactured in Noida, due to perceived higher quality from Pune. Tables show the total cost and revenue at different production volumes for both locations. Pune has higher total revenue at all volumes due to higher selling price, though total cost is also higher.

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    Break Even Analysis

    Uploaded by

    Amit Admune
    17 views8 pages
    The document compares the total cost and total revenue of establishing a clock manufacturing facility in two locations: Noida and Pune. In Noida, the fixed cost is Rs. 1.8 million and variable cost per clock is Rs. 40. In Pune, the fixed cost is Rs. 2 million and variable cost per clock is Rs. 30. Clocks manufactured in Pune can be sold for Rs. 120 each compared to Rs. 100 each if manufactured in Noida, due to perceived higher quality from Pune. Tables show the total cost and revenue at different production volumes for both locations. Pune has higher total revenue at all volumes due to higher selling price, though total cost is also higher.

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    break even analysis

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    The document compares the total cost and total revenue of establishing a clock manufacturing facility in two locations: Noida and Pune. In Noida, the fixed cost is Rs. 1.8 million and variable cost per clock is Rs. 40. In Pune, the fixed cost is Rs. 2 million and variable cost per clock is Rs. 30. Clocks manufactured in Pune can be sold for Rs. 120 each compared to Rs. 100 each if manufactured in Noida, due to perceived higher quality from Pune. Tables show the total cost and revenue at different production volumes for both locations. Pune has higher total revenue at all volumes due to higher selling price, though total cost is also higher.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    17 views8 pages

    Break Even Analysis

    Uploaded by

    Amit Admune
    The document compares the total cost and total revenue of establishing a clock manufacturing facility in two locations: Noida and Pune. In Noida, the fixed cost is Rs. 1.8 million and variable cost per clock is Rs. 40. In Pune, the fixed cost is Rs. 2 million and variable cost per clock is Rs. 30. Clocks manufactured in Pune can be sold for Rs. 120 each compared to Rs. 100 each if manufactured in Noida, due to perceived higher quality from Pune. Tables show the total cost and revenue at different production volumes for both locations. Pune has higher total revenue at all volumes due to higher selling price, though total cost is also higher.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 8

    location

    cost components Faridabad Kolkata New Delhi The company has finan
    transporation cost(Rs/unit) 10 20 9at 15% interest per ann
    cost of material (Rs/unit) 120 110 100production of 5000-100
    taxes (Rs/year) 40000 35000 45000
    cost of construction of the factory (Rs) 5000000 4000000 4700000
    electricity cost (Rs/year) 22000 15000 25000
    labor (Rs/unit) 26 21 23

    Fixed cost (per Annum)


    location
    cost components Faridabad Kolkata New Delhi
    cost of construction of the factory (Rs) 750000 600000 705000
    electricity cost (Rs/year) 22000 15000 25000
    taxes (Rs/year) 40000 35000 45000
    Total fixed cost 812000 650000 775000

    total production cost

    Faridabad Kolkata New Delhi


    0 812000 650000 775000
    5000 1592000 1405000 1435000
    10000 2372000 2160000 2095000

    2500000

    2000000
    total production cost

    1500000

    1000000

    500000
    1000000

    total
    500000

    0
    0 5000
    volume of production
    The company has financed the construction cost of the factory by a loan from the SBI
    at 15% interest per annum. find the economically best location option for the
    production of 5000-10000units.

    location
    cost components FaridabadKolkata New Delhi
    transporation cost(Rs/unit) 10 20 9
    cost of material (Rs/unit) 120 110 100
    labor (Rs/unit) 26 21 23
    Total variable cost (per unit) 156 151 132

    Faridabad
    Kolkata
    New Delhi
    New Delhi

    5000 10000
    ume of production
    n from the SBI
    or the
    Time Clocks Ltd. is considering two loaction options for locating its new clock manufacturing faci
    for the facility are Rs.2million and Rs.30 per clock respectively. on the other hand Noida, the FC a
    clock can be sold for Rs.100 if manufactured at Noida and same clock can be fetch Rs.120 if man
    manufactured at Pune being better.

    TC and TR at Noida TC and TR at Pune

    Volume of Volume of
    production (n) production (n)
    (1000units) total cost total revenue (1000units) total cost
    0 1800000 0 0 2000000
    10 2200000 1000000 10 2300000
    20 2600000 2000000 20 2600000
    30 3000000 3000000 30 2900000
    40 3400000 4000000 40 3200000
    50 3800000 5000000 50 3500000

    NOIDA
    7000000
    6000000

    Total cost/total revenue


    total cost total revenue 6000000
    5000000 5000000
    Total cost/total revenue

    4000000 4000000
    3000000
    3000000
    2000000
    2000000 1000000
    0
    1000000 0

    0
    0 10 20 30 40 50
    Volume of production (1000units)
    ock manufacturing facility, Pune and Noida. The company estimated that the FC and VC at Pune
    er hand Noida, the FC and VC are estimated at Rs. 1.8million and Rs.40 per clock respectively. A
    be fetch Rs.120 if manufactured at Pune as the consumer perception of the quality products

    total revenue
    0
    1200000
    2400000
    3600000
    4800000
    6000000

    PUNE

    7000000
    total cost total revenue
    Total cost/total revenue

    6000000
    5000000
    4000000
    3000000
    2000000
    1000000
    0
    0 10 20 30 40 50
    Volume of production (1000units)
    nd VC at Pune
    espectively. A
    y products

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