Break even analysis

Formulae:-

Fixed cost/ selling price per unit- variable cost per unit

In our manufacturing plant

Fixed cost= Plant + machinery + electricity + land

= 15 lakh + 80 lakh + 1 crore

Variable cost= raw material+ labor+ prickling+washing+ wire Drying powder+ dies and fixtures+ packing

In 1 ton 18 bags are produced and 10% is scrap (100 kg) if left

The rate is Rs 35/ kg for buying the raw material and Rs 27/ kg is the rate of scrap

So 1 ton we get of Rs 35000 less scrap 2700 is sold

Cost of raw material for 18 bags = Rs 32300

Cost of raw material for 1 bag = Rs 1792

Break even will come after 2 years and 18 days.