Scribd Logo
Upload

Welcome to Scribd!

  • Break-Even Analysis

    Uploaded by

    Minza
    9 views5 pages
    The document discusses break-even analysis for a company deciding whether to produce a product internally or outsource production. It provides manufacturing fixed costs of $234,000 and variable costs of $2 per unit for internal production. Outsourcing costs $3.50 per unit. The break-even point is calculated as 156,000 units, which is the quantity where total costs of internal production equals total costs of outsourcing. A chart shows total costs for different production quantities, with costs being equal at 156,000 units.

    Original Description:

    Original Title

    Solved - Example 1 Revisit & Example 2 Recording

    Copyright

    © © All Rights Reserved

    Available Formats

    XLSX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    Report this Document
    The document discusses break-even analysis for a company deciding whether to produce a product internally or outsource production. It provides manufacturing fixed costs of $234,000 and variable costs of $2 per unit for internal production. Outsourcing costs $3.50 per unit. The break-even point is calculated as 156,000 units, which is the quantity where total costs of internal production equals total costs of outsourcing. A chart shows total costs for different production quantities, with costs being equal at 156,000 units.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    9 views5 pages

    Break-Even Analysis

    Uploaded by

    Minza
    The document discusses break-even analysis for a company deciding whether to produce a product internally or outsource production. It provides manufacturing fixed costs of $234,000 and variable costs of $2 per unit for internal production. Outsourcing costs $3.50 per unit. The break-even point is calculated as 156,000 units, which is the quantity where total costs of internal production equals total costs of outsourcing. A chart shows total costs for different production quantities, with costs being equal at 156,000 units.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 5

    Break-Even point (Goal Seek)

    Don't forget to name the cells!

    Nowlin Plastics

    Parameters
    Manufacturing Fixed Cost $234,000.00
    Manufacturing Variable Cost per Unit $2.00

    Outsourcing Cost per Unit $3.50

    Model
    Quantity 156,000 X

    Total Cost to Produce $546,000.00 Y1

    Total Cost to Outsource $546,000.00 Y2

    Savings due to Outsourcing $0.00

    Chart Title
    $12.00

    $10.00

    $8.00

    $6.00

    $4.00

    $2.00

    $-
    0 00 0 00 0 00 0 00 00 00 0 00 00
    25 50 75 00 50 50
    0
    75 00
    1 12 1 1 20 2
    Production equation QTY 25000 50000
    TFC + VC*X = Y1 Savings by O $0.00

    Outsourcing Equation
    OC * X = Y2

    Breakeven point Qty Savings by O


    $0.00
    TFC + VC*X = OC *X 25000
    TFC = OC*X - VC*X 50000
    TFC = (OC -VC) *X 75000
    TFC /(OC - VC) = X 100000
    156000 LHS 125000
    150000
    175000
    200000
    225000
    250000
    275000
    300000

    Qty Cost to make Cost to O


    Chart Title $546,000.00 $546,000.00
    $12.00 25000
    50000
    $10.00 75000
    $8.00
    100000
    125000
    $6.00 150000
    175000
    $4.00
    200000
    $2.00 225000
    250000
    $-
    00 00 00 00 00 00 00 00 00 00 00 00
    275000
    0 0 0 0 50 0 0 00 0 0 50 0
    25 50 75 1 00 12 1 50 1 75 20 2 25 2 50 27 3 00 300000
    75000 100000 125000 150000 175000 200000 225000 250000

    $0.00 2.75 3 3.25 3.5 3.75 4


    25000
    50000
    75000
    100000
    125000
    150000
    156000
    175000
    200000
    225000
    250000
    275000
    300000
    275000 300000
    Gambrell Manufacturing
    Parameters
    Component ID 570 578 741 755
    Inventory On-Hand 5 30 70 17
    Order Up to Point 100 55 70 45
    Cost per unit $4.50 $12.50 $3.26 $4.15

    Fixed Cost per Order $120

    Minimum Order Size for Discount 50


    Discounted to 100%

    Model

    Component ID 570 578 741 755


    Order Quantity 95 25 0 28
    Cost of Goods $427.50 $312.50 $0.00 $116.20

    Total Number of Orders 3

    Total Fixed Costs $360.00


    Total Cost of Goods $856.20
    Total Cost $1,216.20

    You might also like