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Plastics Factory Break-Even Point (BEP) Analysis

Calculates the minimum annual production quantity (in kg or units) or sales revenue required for a plastics manufacturing plant to cover fixed overheads.

Mathematical Canonical Relation
BEPunits=FfixedPselling−Vvariable⇒BEPsales=Ffixed1−VPBEP_{units} = \frac{F_{fixed}}{P_{selling} - V_{variable}} \quad \Rightarrow \quad BEP_{sales} = \frac{F_{fixed}}{1 - \frac{V}{P}}
Plain Formula: BEP_units = Fixed_Cost / (Selling_Price - Variable_Cost)

Live Engineering Parameter Solver

Input your production or test values below for instant, verified output.

Verified Engine
F_fixed
Range: 500000 – 20000000 ₹/year
P_sell
Range: 60 – 800 ₹/kg
V_var
Range: 40 – 600 ₹/kg
Calculated Engineering Result:
90 Tonnes/year (₹14.9 Lakhs Revenue)
Engineering Verification:Contribution margin is ₹40/kg.

When & Where to Apply

Use when building project reports for bank loans (MUDRA, PMEGP) or calculating plant capacity utilization for profitability.

Common Engineering Pitfalls

  • Excluding machine loan interest and maintenance reserve from annual fixed costs

Physical Assumptions & Validity Limits

  • Constant selling price per unit
  • Linear variable costs with volume
  • Fixed costs include machine EMI, factory rent, base salaries, and fixed electrical load

Variable Symbols, SI Units & Dimensional Specifications

SymbolVariable MeaningSI UnitTypical Industrial Range
BEP_{units}Break-even volumekg/year—
F_{fixed}Annual fixed overhead costs₹ (Rupees)3600000
P_{selling}Selling price realization per kg₹/kg165
V_{variable}Variable cost per kg (resin + power)₹/kg125

Worked Industrial Numerical Example: ₹50 Lakh PVC Pipe Extrusion Plant Break-Even

Problem Statement:

A new PVC pipe extrusion factory has annual fixed costs F = ₹36 Lakhs (₹3,600,000). PVC pipe selling price = ₹165/kg. Variable cost (resin + power + additives) = ₹125/kg. Calculate annual break-even output in kg and monthly revenue.

Step-by-Step Numerical Solution:
  1. Calculate contribution margin: ₹165 - ₹125 = ₹40/kg
  2. Divide fixed costs by margin: BEP = ₹3,600,000 / ₹40 = 90,000 kg/year (90 Tonnes/year)
  3. Calculate monthly revenue: 90,000 kg * ₹165/kg = ₹1.485 Crores/year (₹12.37 Lakhs/month)
Final Answer: 90 Tonnes/year (7.5 Tonnes/month)
💡 Engineering Interpretation: The plant must process at least 7.5 Tonnes/month to achieve break-even; all production above 90 Tonnes generates net profit at ₹40/kg margin.

Authoritative Technical Reference & Source Provenance

Plastics Manufacturing Systems Engineering by David Kazmer (Hanser, 2016), 2nd Edition, Page 310-318.
Connected Curriculum Lesson

Cost Estimation, Machinery ROI & Break-Even Analysis

Study Full Lesson