Nippon Ply Case Study Analysis
Break Even Units:
Table 2 shows the results of break-even units which is the point in which the company will stand on the position where neither profit and nor loss will be incurred. The break-even units 11,491 show that the Nippon ply should sell 11,491 units in its expanded location in order to cover its fixed cost of 3,792,000 Indian rupees.
Table 2: Break Even Units
| Number of Units | 3,750 |
| Total Variable Cost | 7,012,500 |
| Variable Cost per Unit | 1,870 |
| Sales Price per unit | 2,200 |
| Contribution Margin per unit | 330 |
| Total Fixed Cost | 3,792,000 |
| Break Even Units |
11,491 |
Break Even Units with Targeted Profit:
Table 3 shows the results of break-even units with targeted profits of 3,000,000 Indian rupees. The break-even units 20,582 shows that the Nippon ply should sell 20,582 units in its expanded location in order to cover its fixed cost of 3,792,000 Indian rupees and to earn the targeted profit of 3,000,000 Indian rupees.
Table 3: Break Even Units with Targeted Profit
| Number of Units | 3,750 |
| Total Variable Cost | 7,012,500 |
| Variable Cost per Unit | 1,870 |
| Sales Price per unit | 2,200 |
| Contribution Margin per unit | 330 |
| Targeted Profit | 3,000,000 |
| Total Fixed Cost | 3,792,000 |
| Break Even Units | 20,582 |
Change to ROE and ROI at 85% and 100% Capacity Level:
Table 4 shows the change to return on investment (ROI) and return on equity (ROE) if Nippon ply operates at 85 percent of capacity level and 100 percent of the capacity levelsare 50.68 percent and 25.23 percent respectively.
Table 4:Change to ROE and ROI at 85% and 100% Capacity Level
| 65% Utilization | 85% Utilization | 100% Utilization | |
| First Year Production | Second Year Production | Third Year Production | |
| No of Units | 29,250 | 38,250 | 45,000 |
| Price Per Unit | 2,200 | 2,200 | 2,200 |
| Total Revenue | 64,350,000 | 84,150,000 | 99,000,000 |
| Variable Cost Per Unit | 1,870 | 1,870 | 1,870 |
| Total Variable Cost | 54,697,500 | 71,527,500 | 84,150,000 |
| Contribution Margin | 9,652,500 | 12,622,500 | 14,850,000 |
| Total Fixed Cost | 3,792,000 | 3,792,000 | 3,792,000 |
| Net Profits | 5,860,500 | 8,830,500 | 11,058,000 |
| Total Investment | 29,125,000 | 29,125,000 | 29,125,000 |
| Total Equity | 21,915,000 | 21,915,000 | 21,915,000 |
| Return on Investment | 20.12% | 30.32% | 37.97% |
| Return on Equity | 26.74% | 40.29% | 50.46% |
| Change to Return on Investment | 50.68% | 25.23% | |
| Change to Return on Equity | 50.68% | 25.23% |
Recommendations:
On the basis of above calculated figures, it has been recommended to the Nippon ply that the company should expand its business, because it provides the 20.12 percent return on investment at 65 percent of the capacity level and the 26.74 percent return on equity at 65 percent of the capacity level which is good enough to continue the project at the lowest level of capacity utilization................................
This is just a sample partical work. Please place the order on the website to get your own originally done case solution.
Related Case Solutions & Analyses:
Fat Debate on Big Food Unraveling Blogosphere Reactions
Lin TV Corp
Vitalia Franchise
Tank in the Bog (A)
Boston.com
edocs Inc. (A)
CASE ANALYSIS: SHODH – MARKET RESEARCH FOR THE ECONOMY HOUSING – (A)
Porsche: The Cayenne Launch
Economic Principles and Decision Making
Communication Management Plan Version 1.0 Date
