A Co wants to compare 2 plans for sales.

In plant A no sales commission is to be paid for units

less than 20000. For units above 20000 Sales commission = Re. 1 per unit. In plant B also for
sales upto 20000 there is no commission. For sales between 20000 & 60000 commission is to
be paid @ Re 0.60 per unit betwwen 20000 & 6000 units. Above 60000 units it is to be paid at
Re. 1.50 per unit for each unit in excess of 60000 units. Prepare a spreadsheet to answer follo:
- 1.) Break Even Sales Volume of both plant. 2.) Sales volume at which both plants will yield
same profit.Below this sales volume one plant will earn profit while other may suffer loss and
above this level the plant suffering losses may earn profit and the other may stand to lose.
Variable Cost Per Unit Fixed Cost Total
RM 15 Rent 60000
Utilities Cost 5 + Salaries 200000
Total V.C Per Unit = RM 20 + Adv Exp 80000
Per unit + Utilites Cost + Other F.C 20000
Per Unit = Total F.C = 360000
Selling Price Per Unit = 25

Ques 1 : Break Even Sales Volume of both plant.

Plant A
Break Even Sales Volume = Fixed Cost + Variable Cost
Let the break even unit = X

So selling Price * X = Total fixed Costs + Total Variable Cost Per Unit * X + Sales commission per unit * (X-20000)
25 * X = 360000 + 20*X + 1 (X-20000)

Qts Sales Revenue = 25 * Qt Total Costs

50000 1250000 1390000
60000 1500000 1600000
70000 1750000 1810000
80000 2000000 2020000
85000 2125000 2125000 BEP
90000 2250000 2230000
X= 85000

Plant B
Break Even Sales Volume = Fixed Cost + Variable Cost
Let the break even unit = X

So selling Price * X = Total fixed Costs + Total Variable Cost Per Unit * X + Sales commission per unit * (60000-20000)
60000)
25 * X = 360000 + 20*X + 0.6*(60000-20000) + 1.5*(X-60000)

Qts Sales Revenue = 25 * Qt Costs

50000 1250000 1369000 Note =>
60000 1500000 1584000
70000 1750000 1799000
80000 2000000 2014000
84000 2100000 2100000 BEP
90000 2250000 2229000
92000 2300000 2272000
X= 84000

Thus Plant A has Break Even Sales Volume of 85000 Units, While Plant B has Break Sales Volume of 84000 Units.

Ques2: Sales volume at which both plants will yield same profit.Below this sales volume one plant will earn profit
while other may suffer loss and above this level the plant suffering losses may earn profit and the other may stand
to lose.
 Plant A
Qts Sales Revenue = 25 * Qt Costs Profit
50000 1250000 1390000 -140000
60000 1500000 1600000 -100000
70000 1750000 1810000 -60000
80000 2000000 2020000 -20000
84000 2100000 2104000 -4000
90000 2250000 2230000 20000
92000 2300000 2272000 28000
95000 2375000 2335000 40000
100000 2500000 2440000 60000

Plant B
Qts Sales Revenue = 25 * Qt Costs Profit
50000 1250000 1369000 -119000
60000 1500000 1584000 -84000
70000 1750000 1799000 -49000
80000 2000000 2014000 -14000
84000 2100000 2100000 0
90000 2250000 2229000 21000
92000 2300000 2272000 28000
95000 2375000 2336500 38500
100000 2500000 2444000 56000

Thus at sales volume of 92000 both the plants earn equal profits. Above it Plant A earns more profit and
Below it Plant B earns more profit
* X + Sales commission per unit * (X-20000)

* X + Sales commission per unit * (60000-20000) + S.C in excess of 60000 * (X-

While Using SP per unit n Fixed Costs

in calculation use "$" for making it a
constant value n absolute cell address

nt B has Break Sales Volume of 84000 Units.

sales volume one plant will earn profit

may earn profit and the other may stand
 profit < plant B

profit > plant B

profit > plant A

profit < plant A

ve it Plant A earns more profit and