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  • Ash Fly Project Case Solution

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    Saad Arain
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    1) The project involves manufacturing fly ash bricks with a total project cost of $8 million over 5 years and no salvage value. Fixed costs total $16.1 million over 5 years, including rent, salaries, interest expenses, and depreciation. 2) Break-even sales are $16.07 million over 5 years, or 2.296 million units per year. Variable costs are estimated at $10.8 million over 5 years. 3) At a sales level of $21 million per year and 4 million units, the projected return on equity is 71% and return on investment is 43%.

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    solution of ash fly project case stufy

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    Ash Fly project Case solution

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    1) The project involves manufacturing fly ash bricks with a total project cost of $8 million over 5 years and no salvage value. Fixed costs total $16.1 million over 5 years, including rent, salaries, interest expenses, and depreciation. 2) Break-even sales are $16.07 million over 5 years, or 2.296 million units per year. Variable costs are estimated at $10.8 million over 5 years. 3) At a sales level of $21 million per year and 4 million units, the projected return on equity is 71% and return on investment is 43%.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    103 views6 pages

    Ash Fly Project Case Solution

    Uploaded by

    Saad Arain
    1) The project involves manufacturing fly ash bricks with a total project cost of $8 million over 5 years and no salvage value. Fixed costs total $16.1 million over 5 years, including rent, salaries, interest expenses, and depreciation. 2) Break-even sales are $16.07 million over 5 years, or 2.296 million units per year. Variable costs are estimated at $10.8 million over 5 years. 3) At a sales level of $21 million per year and 4 million units, the projected return on equity is 71% and return on investment is 43%.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
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    of 6

    FLY ASH BICK PROJECT

    project cost 8,000,000


    project life in years 5
    salvage of project 0
    deprication per year 1600000

    fixed costs

    month year 5 year


    Building rent 50000 600000 3000000
    admin cost 10000 120000 600000
    office supply 5000 60000 300000
    electricity 10000 120000 600000
    misc 20000 240000 1200000
    interest exp 40000 480000 2400000
    dep of plant 133333.3 1600000 8000000
    total 268333.3 3220000 16100000

    salaries
    month year 5 year
    workers 100000 1200000 6000000
    office assis 20000 240000 1200000
    watchmen 15000 180000 900000
    drivers 25000 300000 1500000
    pro managers 50000 600000 3000000
    Total 210000 2520000 12600000

    478333.3 5740000 28700000


    fixed cost

    year units sales


    0 0
    500000 3500000
    1000000 7000000
    1500000 10500000
    2000000 14000000
    2296000 16072000
    2400000 16800000
    3000000 21000000

    for 2m profit
    3096000 21672000
    unit sales

    INVESTMENT 10000000
    EQUITY 6000000
    4000000
    60% 80% 100%
    units 2400000 3200000 4000000
    sales 16800000 22400000 28000000
    vc 10800000 14400000 18000000
    cm 6000000 8000000 10000000
    Fixed cost 5740000 5740000 5740000
    profit 260000 2260000 4260000
    ROE 4% 38% 71%
    ROI 3% 23% 43%
    interest 480000

    Variable Cost target year


    monthly
    month year
    fly ash 250000 3000000
    gypsym 250000 3000000
    lime 300000 3600000
    sand 40000 480000
    electricity 10000 120000
    labor 50000 600000
    total 900000 10800000

    Breakeven
    units sales
    month 191333.33333 1339333.3333
    year 2296000 16072000
    5 years 11480000 80360000

    CVP Analys
    s a l es VC fixed cost
    VC fixed cost breakeven profit
    0 5740000 16072000 -5740000 25000000
    2250000 5740000 16072000 -4490000
    4500000 5740000 16072000 -3240000 20000000
    6750000 5740000 16072000 -1990000
    9000000 5740000 16072000 -740000
    10332000 5740000 16072000 0 15000000

    10800000 5740000 16072000 260000


    10000000

    5000000
    15000000

    13500000 5740000 16072000 1760000 10000000

    5000000

    0
    0 500000 1000000 1500000

    -5000000

    -10000000
    2.4m
    200000 units
    5 year per unit cost
    15000000 1.25
    15000000 1.25 price 7
    18000000 1.5 V Cost 4.5
    2400000 0.2 CM unit 2.5 36%
    600000 0.05
    3000000 0.25
    54000000 4.5

    CVP Analysis
    VC fixed cost Breakeven profit
    1000000 1500000 2000000 2296000 2400000 3000000

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