Bill French's Initial Analysis

Product Class Expense Analysis (Normal Year)

Product Lines
Aggregate A B
Sales at full capacity (units) 2000000
Actual Sales Volume (units) 1500000 600000 400000
Actual Sales Mix (Qty) 0.40 0.27
Unit Sales Price ($) 1.20 1.67 1.5
Total Sales Revenue ($) 1799999.996 999999.996 600000
Variable Expense per unit ($) 0.75 1.25 0.625
Total variable Expense ($) 1125000 750000 250000
Contribution margin / Unit (s-v) 0.45 0.42 0.88
Contribution Margin (Revenue -
Tot'Variable Expense) ($) 674999.996 249999.996 350000
Fixed Expense ($) 520000 170000 275000
Operating Profit (EBIT) ($) 155000 80000 75000

Ratios
Variable Expense / Sales 62.50% 75.00% 41.67%
Profit/Volume ratio (1 - VC/Sales) 37.50% 25.00% 58.33%
Capacity Utilization 75%

BESQ - Product wise 408000 314286

Break-even Sales Qty (BESQ) = Fixed
Expense / Contribution margin per
unit 1155556 462222 308148
Break-even Sales $ = Fixed Expense /
(P/V ratio) 1386667
Sales Mix (Value) 0.56 0.33
Weighted-Average Contribution Margin
ratio 37.5%
Break-even Sales $ = Fixed Expense /
(P/V ratio) 1386667 770370 462222
Break-even Capacity 57.78%
 Product Class Expense Analysis (Next Year - Meeting Dividend Requirements)
Product Lines
Aggregate A B
Sales at full capacity (units) 2000000
Actual Sales Volume (units) 1750000 400000 400000
Actual Sales Mix (Qty) 0.23 0.23
Unit Sales Price ($) 1.16 1.67 1.5
Total Sales Revenue ($) 2026667 666667 600000
Variable Expense per unit ($) 0.56 1.25 0.625
Total variable Expense ($) 987500 500000 250000
Contribution margin / Unit (s-v) 0.59 0.42 0.88
Contribution Margin (Revenue -
Tot'Variable Expense) ($) 1039167 166667 350000
Fixed Expense ($) 640000 170000 275000
Operating Profit (EBIT) ($) 399167 -3333 75000

Ratios
Variable Expense / Sales 48.73% 75.00% 41.67%
Profit/Volume ratio (1 - VC/Sales) 51.27% 25.00% 58.33%
Capacity Utilization 87.5% 20.0% 20.0%

408000 314286
Break-even Sales Qty (BESQ) = Fixed
Expense / Contribution margin per
unit 1077787 246351 246351
Break-even Sales $ = Fixed Expense /
(P/V ratio) 1248180
Sales Mix (Value) 0.33 0.30
Weighted-Average Contribution Margin
ratio 51.3%
Break-even Sales $ = Fixed Expense /
(P/V ratio) 1248180 456140 410526
Break-even Capacity 53.89%
Desired Sales Qty = Fixed Expense /
Contribution margin per unit 1414595
Desired Sales $ (Fixed Expense +
Desired Profits/ (P/V ratio) 1638236
Desired Capacity Utilization 71%

Product Class Expense Analysis (Next Year - Meeting Dividend & Union
Requirements)
Product Lines
Aggregate A B
Sales at full capacity (units) 2000000
Actual Sales Volume (units) 1750000 400000 400000
Actual Sales Mix (Qty) 0.23 0.23
Unit Sales Price ($) 1.16 1.67 1.5
Total Sales Revenue ($) 2026667 666667 600000
Variable Expense per unit ($) 0.62 1.375 0.6875
Total variable Expense ($) 1086250 550000 275000
Contribution margin / Unit (s-v) 0.54 0.29 0.81
Contribution Margin (Revenue -
Tot'Variable Expense) ($) 940417 116667 325000
Fixed Expense ($) 640000 170000 275000
Operating Profit (EBIT) ($) 300417 -53333 50000

Ratios
Variable Expense / Sales 53.60% 82.50% 45.83%
Profit/Volume ratio (1 - VC/Sales) 46.40% 17.50% 54.17%
Capacity Utilization 87.5% 20.0% 20.0%

Break-even Sales Qty (BESQ) = Fixed

Expense / Contribution margin per
unit 1190961 272220 272220
Break-even Sales $ = Fixed Expense /
(P/V ratio) 1379247
Sales Mix (Value) 0.33 0.30
Weighted-Average Contribution Margin
ratio 46.4%
Break-even Sales $ = Fixed Expense /
(P/V ratio) 1379247 456140 410526
Break-even Capacity 59.55%
Desired Sales Qty = Fixed Expense /
Contribution margin per unit 1563137
Desired Sales $ (Fixed Expense / (P/V
ratio) 1810261
Desired Capacity Utilization 78%
duct Lines
C

500000
0.33
0.4
200000
0.25
125000
0.15

75000
75000
0

62.50%
37.50%

500000 520000

385185 520000

0.11

154074
d Requirements)
duct Lines
C

950000
0.54
0.8
760000
0.25
237500
0.55

522500
195000
327500

31.25%
68.75%
47.5%

354545

585084

0.38

520000
end & Union

duct Lines
C

950000
0.54
0.8
760000
0.275
261250
0.53

498750
195000
303750

34.38%
65.63%
47.5%

646522

0.38

520000