Scribd
Upload
49 views3 pages

Let N

The document contains calculations to determine the break-even points for 4 different scenarios: 1) Whether to use manual labor or a machine for a production process, determining the break-even is 6,651 units per year. 2) Renting out units in a new building, determining the break-even monthly rental is 564 units. 3) Operating a company car for a salesman, determining the break-even kilometers traveled annually is 26,616 km. 4) Selling electricity to customers, determining the break-even price per kw-hr is ₱0.49.

Uploaded by

Ellen Mae Olaguer
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
49 views3 pages

Let N

The document contains calculations to determine the break-even points for 4 different scenarios: 1) Whether to use manual labor or a machine for a production process, determining the break-even is 6,651 units per year. 2) Renting out units in a new building, determining the break-even monthly rental is 564 units. 3) Operating a company car for a salesman, determining the break-even kilometers traveled annually is 26,616 km. 4) Selling electricity to customers, determining the break-even price per kw-hr is ₱0.49.

Uploaded by

Ellen Mae Olaguer
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

Let N = the number of units per year for the two methods to breakeven.

Manual Labor:
Total annual cost = 1 .80 N +2,000

With Machine:
( F .C .−S . V . ) i ( 40,000−5,000 ) ( 0.12 )
Depreciation = = =₱ 2,845.60
( 1+ i )n −1 (1+0.12 )8 −1
Operation Cost = ₱ 30,000
Minimum Required Profit =( 0.12 ) ( 40,000 ) =₱ 4,800
Labor Cost = 0.50 N
Total annual cost = 2,845.60+30,000+ 4,800+0.50 N=0.50 N +10,645.60

To breakeven:
1.80 N +2,000=0.50 N +10,645.60
1.80 N−0.50 N =10,645.60−2,000
1. 3 N =8 , 645.60
8,645.60
N= =6,650.46=6,651 units
1. 3
N=6,651units
Total capital investment = ( 10 ) ( ₱ 20,000 ) + ₱ 60,000=₱ 260,000
Annual Expenses:
( F .C .−S . V . ) i ( 200,000−0 ) ( 0.12 )
Depreciation on building = = =₱ 11,396.83
( 1+ i )n −1 ( 1+0.12 )10−1
Building Insurance = ( 0.03 ) ( ₱ 200,000 ) =₱ 6,000
Real estate taxes = ( 0.03 5 ) ( ₱ 12 0,000 )=₱ 4 , 2 00
Maintenance = ₱2,000
Minimum Required Profit =( 0.12 ) ( ₱ 260,000 )= ₱ 31, 2 00
Total Annual Expenses = 11,396.83+6,000+ 4,200+2,000+31,200=₱ 54,796.83

Let R = average monthly rental for each unit


Gross annual income with 90% average occupancy = ( 0.90 ) ( 10 ) ( 12 R ) =108 R
Income tax = ( 0.10 ) ( 108 R )=10.8 R
Net Annual Income = 108 R−10.8 R=97.2 R

To breakeven:
97.2 R=54,796.83
54,796.83
R= =563.75=564 units
97.2

Let N = number of kilometers travelled annually by a salesman


Amount paid to salesman with a car = ₱ 9.50 N

Annual Expenses for Company Car:


Fixed Cost:
( F .C .−S . V . ) i ( 4 00,000−50,000 )( 0.12 )
Depreciation = = =₱ 73,232.05
( 1+ i )n −1 ( 1+0.12 ) 4−1
Insurance = ₱12,500
Storage Cost = ( 12 ) ( ₱ 500 )=₱ 6,000
Minimum required profit = ( 0. 12 )( ₱ 4 00 , 000 ) =₱ 48 , 000
Total Annual Expenses = 73,232.05+12,500+6,000+ 48,000=₱ 139,732.05
Variable cost for fuel, oil, etc. = ₱ 4.25 N
Total Annual Expenses = 4.25 N +139,732.05

To breakeven:
9.50 N=4.25 N +139,732.05
9.50 N−4.25 N=139,732.05
5 .25 N =139,732.05
139,732.05
N= =26,615.63=26,616 km
5 .25

Let P = price per kw-hr paid by customers


Number of kw-hr sold to customers = ( 0.80 ) ( 2,300,000 )=1,840,000 kw−hr
Gross monthly income = 1,840,000 P

Monthly payment to NPC = ( 2,300,000 ) ( ₱ 0.20 )= ₱ 460,000


Taxes = ( 0.025 ) ( 1,840,000 P )=46,000 P each month
Other monthly expenses = 75,000+225,000+70,000+30,000+20,000=₱ 420,000
Total monthly expenses = ₱ 460,000+ ₱ 420,000+ 46,000 P=46,000 P+ 880,000

To breakeven:
1,840,000 P=46,000 P+880,000
1,840,000 P−46,000 P=880,000
1,794,000 P=880,000
880,000
P= =₱ 0.49 per kw−hr
1,794,000

You might also like