|
|
Without Machinery Per Unit |
Without Machinery |
With Machinery Per Unit |
With Machinery |
Increase In Sales Volume above Breakeven
Point |
|
|
|
|
|
|
|
|
Units Sold |
|
4550 |
|
4550 |
2290 |
|
|
|
|
|
|
|
|
Sales |
39 |
177450 |
39 |
177450 |
89310 |
|
Variable Cost |
17 |
77350 |
11 |
50050 |
25190 |
|
|
|
|
|
|
|
|
Contribution |
22 |
100100 |
28 |
127400 |
64120 |
|
|
|
|
|
|
|
|
Fixed Costs |
|
39500 |
|
64100 |
64100 |
|
|
|
|
|
|
|
|
Profit |
13.32 |
60600 |
13.91 |
63300 |
20 |
|
|
|
|
|
|
|
|
Breakeven Point (Fixed Costs / Contribution Per Unit)
(Units) |
|
1795 |
|
2289 |
|
When the management will install the machinery, the fixed costs
will go up and hence the breakeven units will also increase. As
seen above, by installing new machinery Breakeven point raised from
1795 units to 2289 units.
When the volume of sales moves above the breakeven point the
contribution margin and Operating profit will go up.
Increase in Contribution Margin
Operating Profit will become Positive
