Food-Processing-Plant-Design-layout

Food Processing Plant Design & layout
Total fixed costs
BEP =
Unit‟s selling price – Unit‟s variable
costs
For example, suppose that fixed costs for producing 100000 units were
$30,000 a year. Variable costs are $2.20 materials, $4.00 labour, and $0.80 overhead, for a
total of $7.00. If selling price was chosen as $12.00 for each units, then: Break even point will
be $30,000 divided by ($12.00 - 7.00) equals 6000 units. This is the number of units that have
to be sold at a selling price of $12.00 before business will start to make a profit.
3.4.5.1 Advantages and limitation of Break Even Analysis
It explains the relationship between cost, production volume and returns. The major benefit
to using break-even analysis is that it indicates the lowest amount of business activity
necessary to prevent losses.
However, it is best suited to the analysis of one product at a time
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