This document discusses break-even analysis for three companies. Break-even analysis is used to predict when a business will start making a profit by determining the sales volume needed to cover total costs. It provides the break-even point in units and sales for each company. Company 1 produces bricks and has a break-even point of 10,000 units or Rs. 80,000 in sales. Company 2 produces concrete and has a break-even point of 400 tons or Rs. 333,200 in sales. Company 3 manufactures windows and doors and has a break-even point of 900 units or Rs. 162,000 in sales.
3. It can also be used to:
• Evaluate a start-up
idea
• Assess the impact of
new costs
• Project profitability
for a new product
ISB&M
4. Start with your costs…
…By separating them into fixed costs (overheads) and
variable costs
It can also be used to:
You need to know your:
•Total Fixed Costs
•Variable Cost Per Unit
ISB&M
7. COMPANY 1 – SHREE GANESH BRICKS
Shree Ganesh Bricks is a small scale company
situated in Nande. It has production capacity of
around 3000 bricks a day. The bricks they
produce are used in pashan,nande,lupin
industries etc.
The raw material they use to made bricks are
cement pieces, water, fly ash.
ISB&M
8. CALCULATIONS-OF BREAK EVEN POINT
Quantity Produced = 78000 bricks (Per Month)
Total Variable Costs= Rs.390000
Total Fixed Cost=Rs.30000
Total Sales=Rs.624000
Total Cost=Rs.420000
Contribution=Rs.234000
Contribution per-units= Rs.3
BEP(Units) =Total
fixed/contribution per
unit=
30000/3=
10000 Units
BEP(Sales)=BEP(Units)*
price per-unit
ISB&M
10000*8=Rs.80000
9. COMPANY 2 – BHARUCH CONCRETE READY MIX
Bharuch Concrete Mix is a medium scale
company. It is producing around 120 tones of
20mm concrete. Raw material used are 50%
cement , 20% fly ash, 10% river sand and 20%
Rheoplast. It supply concrete mix in all over Pune.
ISB&M
10. CALCULATIONS-OF BREAK EVEN POINT
Quantity Produced = 3120 tones
(Per Month)
Total Variable Costs=Rs. 1818960
Total Fixed Cost=Rs.100000
Total Sales= Rs.2598960
Contribution=Rs.780000
Contribution per-units=Rs.250
BEP(Units) =Total
fixed/contribution p/u=
10000/250=
400 tone
BEP(Sales)=BEP(Units)*
price per-unit
ISB&M
400*833=Rs.333200
11. COMPANY 3 – SHREE DUTTA KRIPA ENT.
Shree Dutta Kripa Ent. is a small scale industry . It
manufactures sliding window, sliding doors and
do the glass work. It is situated in Pashan. Raw
material used are aluminium, steel, rubber PUC,
bolt and glass.
ISB&M
12. CALCULATIONS-OF BREAK EVEN POINT
Sales =6000units
Total Variable Costs= 60000*130= Rs.780000
Total Fixed Cost= Rs.45000
Total sales= 6000*180 Rs. Per sq feet
= 1080000
Contribution Margin= 300000
Contribution Margin in units= 50
BEP(unit)=fixed
cost/contribution p/u
=45000/50
900 units
BEP(sales)=BEP(Units)*
per-units price
=900*150
=162000
ISB&M
Fixed costs are defined as costs that do not vary with the level of production or volume of sales (such as rent, wages, insurance, etc.), while variable costs (such as material or sales commissions) do.
Direct manufacturing costs include both material and labour costs.