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    Capacity Planning (Sample Problems)

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    Eliza Jayne Princess Vizconde
    The document provides examples of capacity planning problems. The first problem calculates the break-even point (BEP), total cost at BEP, and determines if there would be a profit or loss if 400 units are sold. The BEP is 450 units, total cost at BEP is 67,500 PHP, and selling 400 units would result in a 1,000 PHP loss. The second problem calculates the BEP, profit levels, and volume needed for specific profit and revenue targets for a producer of slippers.

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    Capacity Planning (Sample Problems)

    Uploaded by

    Eliza Jayne Princess Vizconde
    48 views2 pages
    The document provides examples of capacity planning problems. The first problem calculates the break-even point (BEP), total cost at BEP, and determines if there would be a profit or loss if 400 units are sold. The BEP is 450 units, total cost at BEP is 67,500 PHP, and selling 400 units would result in a 1,000 PHP loss. The second problem calculates the BEP, profit levels, and volume needed for specific profit and revenue targets for a producer of slippers.

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    The document provides examples of capacity planning problems. The first problem calculates the break-even point (BEP), total cost at BEP, and determines if there would be a profit or loss if 400 units are sold. The BEP is 450 units, total cost at BEP is 67,500 PHP, and selling 400 units would result in a 1,000 PHP loss. The second problem calculates the BEP, profit levels, and volume needed for specific profit and revenue targets for a producer of slippers.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    48 views2 pages

    Capacity Planning (Sample Problems)

    Uploaded by

    Eliza Jayne Princess Vizconde
    The document provides examples of capacity planning problems. The first problem calculates the break-even point (BEP), total cost at BEP, and determines if there would be a profit or loss if 400 units are sold. The BEP is 450 units, total cost at BEP is 67,500 PHP, and selling 400 units would result in a 1,000 PHP loss. The second problem calculates the BEP, profit levels, and volume needed for specific profit and revenue targets for a producer of slippers.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    YOPMAN - PRODUCTION AND OPERATIONS MANAGEMENT (WITH LABORATORY)

    Capacity Planning (Sample Problems)


    I. Problem 1
    Problem:

    Company X manufactures belts for which the material cost is Php 55 per unit. The labor cost is Php 50 a pair and additional
    variable cost is Php 25 per unit. The fixed costs amounts to Php Php 9,000. If each pair of slippers sells at Php 150, find:

    1) BEP?
    2) Total Cost at BEP?
    3) Will there be profit or loss if items sold are 400 units?

    Answer:

    1) BEP? 450 units


    2) Total Cost at BEP? Php 67,500
    3) Will there be profit or loss if items sold are 400 units? Loss of 1,000

    Solution:

    Given:
    Material Cost P 55 per unit
    Labor Cost 130 P 50 a pair
    Variable Cost P 25 per unit
    Fixed Cost P 9,000
    Selling Price P 150 each pair

    𝑭𝒊𝒙𝒆𝒅 𝑪𝒐𝒔𝒕
    Break-even point (BEPx) =
    (𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆−𝑽𝒂𝒓𝒊𝒂𝒃𝒍𝒆 𝑪𝒐𝒔𝒕)
    1) BEP?
    𝟗,𝟎𝟎𝟎
    = 𝟒𝟓𝟎
    (𝟏𝟓𝟎−𝟏𝟑𝟎)

    Total Cost = 𝑭𝒊𝒙𝒆𝒅 𝑪𝒐𝒔𝒕 + (𝑽𝒂𝒓𝒊𝒂𝒃𝒍𝒆 𝑪𝒐𝒔𝒕 𝒙 𝑵𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝑼𝒏𝒊𝒕𝒔)


    2) Total Cost at BEP?
    𝟗, 𝟎𝟎𝟎 + (𝟏𝟑𝟎 𝒙 𝟒𝟓𝟎) = 𝟔𝟕, 𝟓𝟎𝟎

    Profit = (𝑺𝒆𝒍𝒍𝒊𝒏𝒈 𝑷𝒓𝒊𝒄𝒆 𝒙 𝑵𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝑼𝒏𝒊𝒕𝒔) − 𝑭𝒊𝒙𝒆𝒅 𝑪𝒐𝒔𝒕 − (𝑽𝒂𝒓𝒊𝒂𝒃𝒍𝒆 𝑪𝒐𝒔𝒕 𝒙 𝑵𝒖𝒎𝒃𝒆𝒓 𝒐𝒇 𝑼𝒏𝒊𝒕𝒔)
    3) Will there be profit or loss if
    (𝟏𝟓𝟎 𝒙 𝟒𝟎𝟎) − 𝟗, 𝟎𝟎𝟎 − (𝟏𝟑𝟎 𝒙 𝟒𝟎𝟎)
    items sold are 400 units?
    (𝟔𝟎, 𝟎𝟎𝟎) − 𝟗, 𝟎𝟎𝟎 − (𝟓𝟐, 𝟎𝟎𝟎) = −𝟏, 𝟎𝟎𝟎 → Loss

    P a g e 1|2
    Jay]
    YOPMAN - PRODUCTION AND OPERATIONS MANAGEMENT (WITH LABORATORY)
    Capacity Planning (Sample Problems)
    II. Sample Problem 2
    Problem:

    A producer of slippers is looking into putting up a new plant to absorb the backlog of demand that now exists. The primary location
    being considered will have a fixed cost of $9,300 per month and variable cost of $ 0.70 cents per unit produced. Each item is sold to
    retailers at a price that averages $ 0.90 cents.

    1) What volume per month is required to break even?


    2) What profit would be realized on a monthly volume of
    61,000 units? 87,000 units?
    3) What volume is needed to obtain a profit of $16,000 per
    month?
    4) What volume is needed to provide a revenue of $23,000 per
    month

    Answer:

    1) What volume per month is required to break even? 46,500 units


    2) What profit would be realized on a monthly volume of $2,900;
    61,000 units? 87,000 units? $8,100
    3) What volume is needed to obtain a profit of $16,000 per
    126,500
    month?
    4) What volume is needed to provide a revenue of $23,000 per
    25,555.56
    month

    Solution:

    P a g e 2|2
    Jay]

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