Question

Imagine you are starting a new company. Write the details about the company plus the details of the product e.g. manufacturing processes, materials needed and their criteria, product specifications and features, costs as well as its limitations. Write the assignment based on following guidelines: 1. Introduction of the company 2. Objective of the company 3. Discuss the product and its cost a) Product b) Fixed Cost c) Variable costs d) Price the product e) Profit / Loss f) Breakeven point g) Limitations 4. Conclusion

Answer 1

1 Introdcution of Company Sewage PIPE Manufacturing (SWR PIPE) 2 Objective of the company To Manufacture High Quality Sewage Pipe which to ensure that the material used is entirely safe under the operating conditions of pressure, temperature, corrosion. 3 Discuss the Product and and Its Cost 3a Product - SWR PIPE with Various Size Option 2" SWR Pipe 4" SWR Pipe 6" SWR Pipe 3b Fixed Cost Per Year Rental Cost Manufacturing Machine Cost Labour Cost (6 labour * $ 10000 Per months) Total Fixed Cost $ 1,50,000 $ 5,00,000 $ 7,20,000 $ 13,70,000 3c Variable Cost Per KG of PIPE Manufactured Plastic Granules $ 500 Paint Cost (For $20 Lubricant $ 10 Total VC $ 80

3d Price of The Product 250 Per Kg 3e Profit & Loss Expected Sales Volume(in kg) Expected Sales Revenue (10000*$250) Total Variable Cost(10000*$80) Contribution Margin Total Fixed Cost Profit 100001 $ 25,00,000 A $ 8,00,000 B $ 17,00,000 C= A-B $ 13,70,000 D $ 3,30,000 E = C-D 3f Breakeven Points (BEP) BEP is calucited = Fixed Cost / Contribution margin Contribution Margin Per Unit (1700000/10000) Break even Points (In units) $ 170 1370000/170 8058.823529 i.e 8059 kg is BEP Points In Kg 3g Limitation As there are many Competitor is market for SWR PIPE, Establishing a new manufacturing is challenging but not impossible. Earning low margin while ensuing quality will help in establishing the market 4 Conclusion As expected sales in year one is 10000 kg, which will give us a reasonable profit of $3,30,000. It can be stated SWR pipe manufacturing can a profitable venture. However minimum we have to sell 8059 kg to cover our Fixed cost