A Digital Assignment on

BREAK EVEN POINT ANALYSIS

Submitted in partial fulfilment for the award of the degree of

Production and Operations Management

By

Ruthvik N (17BBA0034)

Under the Guidance of:

Prof. Vincent Herald Wilson
School of Mechanical Engineering
AUGUST, 2019
NESCAFE

Nescafé is a brand of coffee made by Nestlé. It comes in many different forms. The name
is a portmanteau of the words "Nestlé" and "café".Nestlé first introduced their flagship
coffee brand in Switzerland on 1 April 1938.

NESCAFE in VIT men’s hostel

VIT in-campus has more than three outlets of Nescafe and especially an outlet that is
placed in men’s hostel is extremely crowded and has huge demand.

Nescafe’s demanded product at this outlet is NESCAFE Espresso.

One of the most important things to know when learning how to run a successful coffee
shop or preparing a coffee shop business plan is how many coffees the business needs
to sell each day in order to break even. With this figure to hand, it is possible to get an
idea of the size of the premises needed, the number of coffee machines required and the
number of staff necessary to operate the shop.

At break even, the profit from the coffee shop will be zero. When people discuss break
even or break even point, they are simply referring to the level of revenue needed to
cover the costs of operating the coffee shop business. And the capacity of production per
year is around 5000

The coffee shop sells NESCAFE Espresso at 40.00 (excluding all tax), and the variable
cost of the materials (coffee, milk, sugar, cups etc.) used to make the coffee is 25,then :

Fixed cost per annum is 70000

BEP in units= Fixed cost/selling price- variable costs

=70000/40-25

=1725

BEP in sales value= fixed cost / SP – VC *SP

= 70000/40-25 *40

= 69000

Total profit= sales – BEP sales

=5000*40 – 69000

=131000
Lassi Shop:

LASSI SHOP –The story of a “Quick Service Café” is a small format “200 sqft space” F&B
Retail chain which exclusively focuses on the subcontinent’s popular traditional yoghurt
based drink ‘Lassi’. We also serve fresh juices, mocktails and smoothies which are
crafted exquisitely with the finest ingredients which will make you enjoy the fantastic
array of flavours .

Lassi shop outside VIT:

This outlet opposite to VIT is fully crowded and always is on an advantage of having
huge customer base with their shakes and smoothies and fresh juices which are
available at an affordable cost.

One of the product which is always demanded is Sweet Lassi

The business runs in very small sized outlet which is efficient tool for reduction in the
costs of the fixed assets to an extent. These operations are very cost effective and their
main tool of marketing WoM(word of mouth)

The cost of preparing this Sweet Lassi including all variable expenses is 12 and its
selling cost is 30 (including all taxes)

Fixed cost per annum is 90000

Capacity of production is 8000

BEP in units= Fixed cost/selling price- variable costs

=90000/30-12

=5000

BEP in sales value= fixed cost / SP – VC *SP

= 90000/20-12 *20

= 100000

Total profit= sales – BEP sales

=8000*20 – 100000

=60000
Andhra Spice Restaurant:

As VIT’s 35% of students are from Telugu states Andhra and Telangana. This restaurant
foresees an opportunity to provide homely food for Telugu students enriched with
homely essence and spices which are preferred by most of the students.

This restaurant is placed opposite to VIT and is visited by most of the day boarders as
well as hostellers regularly. The product which is excessively demanded is their
Special Biryani

This product costs a customer at 130 and the cost of making it with including all the
variable costs is 70(as per they stated)

Fixed cost per annum is150000

Capacity of production is 5500

BEP in units= Fixed cost/selling price- variable costs

=150000/130-70

=2500

BEP in sales value= fixed cost / SP – VC *SP

= 150000/130-70 *130

= 325000

Total profit= sales – BEP sales

=5500*130 – 325000

=390000