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section 6 .pptx

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The document discusses break even analysis for chemical plants. It provides examples of calculating the break even point in units and sales revenue for different unit retail prices and variable costs. It also contains examples of determining profit given production levels. Questions include calculating break even points, drawing break even charts, and determining if a plant is profitable based on supply and demand curves and fixed and variable costs.

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Economics of Chemical Plants Eng. Kareem H. Mokhtar
Agenda • Break even analysis • Depreciation
Break Even Analysis Fixed Cost Variable Cost Total Cost Revenue $ Units
Question 1 • Each unit retails at $3. It costs you $1 to make each one, and the fixed costs for the period are $500. What is the break-even point in units and in sales revenue? • Profit = sales – fixed cost – variable cost • Zero = 3*units-500- 1*units • BEP units = 250 • BEP units revenue = 750$
Question 2 • Each unit retails at $6. It costs you $2 to make each one, and the fixed costs for the period are $500. What is the break-even point in units and in sales revenue? • Profit = sales – fixed cost – variable cost • BEP units = 125 • BEP units revenue = 750$
Question 3 • Each unit retails at $6. It costs you $1 to make each one, and the fixed costs for the period are $500. draw the BEP chart
Question 4 • Each unit retails at $5. It costs you $1 to make each one, and the fixed costs for the period are $500. What is the break-even point in units and in sales revenue? • Profit = sales – fixed cost – variable cost • Zero = 5*units-500- 1*units • BEP units = 125 • BEP units revenue = 625$
Question 5 • Each unit retails at $3. It costs you $2 to make each one, and the fixed costs for the period are $500. if this factory produces 700 unit, does it gain any profit? If yes, how much profit does it gain? • Profit = sales – fixed cost – variable cost • BEP units = 500 • Yes it gains profit • Revenue at 700 unit = 2100$ • Total cost at 700 unit = 500+2*700 = 1900$ • Profit = 200$
Question 6 • Draw the break-even analysis and determine the revenue and profit for a company producing 500 unit, given that: 1. The break even point is at 230 unit, 1610$ 2. Fixed cost 200$
250 500 750 $ Units 2000 1000 FC TC Revenue 3000
Question 7 • If the fixed cost per unit of a fluid industry is taken as 0.1% of the fixed capital investment. Given the following supply- demand curve, determine if this factory is gaining any profit, given that the variable cost of each unit is 0.01% of the fixed capital and the selling price is 120$. • Cost index in 2022 = 900 Equipment Specs Recovery column Diameter 1.1 m Height 10m Stainless steel Working under 7 bar 10 stainless steel bubble cap Vertical process tank 100 m3 0 50 100 150 200 250 300
answer • Recovery Column = 23000* 2* 1.1 = 50600$ • Bubble cap = 10* 870 * 1.7 = 14790$ • Vertical Process tank = 38037.4$ • PCE in 2004 = 103427.4$ • PCE in 2021 = 209461 $ • FCI for the plant is 1,032,645 $ • Fixed cost = 1032 $ • Variable cost = 103.2$
Answer • Profit = Revenue – fixed cost – variable cost = 0 at BEP • 0 = 120 * x – 1032 – 103.2x • X= 60 unit • Yes it gains profit
section 6 .pptx

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section 6 .pptx

  • 1. Economics of Chemical Plants Eng. Kareem H. Mokhtar
  • 2. Agenda • Break even analysis • Depreciation
  • 3. Break Even Analysis Fixed Cost Variable Cost Total Cost Revenue $ Units
  • 4. Question 1 • Each unit retails at $3. It costs you $1 to make each one, and the fixed costs for the period are $500. What is the break-even point in units and in sales revenue? • Profit = sales – fixed cost – variable cost • Zero = 3*units-500- 1*units • BEP units = 250 • BEP units revenue = 750$
  • 5. Question 2 • Each unit retails at $6. It costs you $2 to make each one, and the fixed costs for the period are $500. What is the break-even point in units and in sales revenue? • Profit = sales – fixed cost – variable cost • BEP units = 125 • BEP units revenue = 750$
  • 6. Question 3 • Each unit retails at $6. It costs you $1 to make each one, and the fixed costs for the period are $500. draw the BEP chart
  • 7. Question 4 • Each unit retails at $5. It costs you $1 to make each one, and the fixed costs for the period are $500. What is the break-even point in units and in sales revenue? • Profit = sales – fixed cost – variable cost • Zero = 5*units-500- 1*units • BEP units = 125 • BEP units revenue = 625$
  • 8. Question 5 • Each unit retails at $3. It costs you $2 to make each one, and the fixed costs for the period are $500. if this factory produces 700 unit, does it gain any profit? If yes, how much profit does it gain? • Profit = sales – fixed cost – variable cost • BEP units = 500 • Yes it gains profit • Revenue at 700 unit = 2100$ • Total cost at 700 unit = 500+2*700 = 1900$ • Profit = 200$
  • 9. Question 6 • Draw the break-even analysis and determine the revenue and profit for a company producing 500 unit, given that: 1. The break even point is at 230 unit, 1610$ 2. Fixed cost 200$
  • 11. Question 7 • If the fixed cost per unit of a fluid industry is taken as 0.1% of the fixed capital investment. Given the following supply- demand curve, determine if this factory is gaining any profit, given that the variable cost of each unit is 0.01% of the fixed capital and the selling price is 120$. • Cost index in 2022 = 900 Equipment Specs Recovery column Diameter 1.1 m Height 10m Stainless steel Working under 7 bar 10 stainless steel bubble cap Vertical process tank 100 m3 0 50 100 150 200 250 300
  • 12. answer • Recovery Column = 23000* 2* 1.1 = 50600$ • Bubble cap = 10* 870 * 1.7 = 14790$ • Vertical Process tank = 38037.4$ • PCE in 2004 = 103427.4$ • PCE in 2021 = 209461 $ • FCI for the plant is 1,032,645 $ • Fixed cost = 1032 $ • Variable cost = 103.2$
  • 13. Answer • Profit = Revenue – fixed cost – variable cost = 0 at BEP • 0 = 120 * x – 1032 – 103.2x • X= 60 unit • Yes it gains profit