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Textile Costing · Lecture 08
CVP in Textiles
Contribution margin and break-even applied to a spinning mill, a weaving shed and a dyeing plant.
SpinningWeavingDyeingBreak-even
Spinning — 250 bags a day of Ne 20/1
| A | B | C | |||
|---|---|---|---|---|---|
| 1 | Daily production (bags of 100 lb) | ||||
| 2 | Monthly fixed cost | ||||
| 3 | Depreciation | ||||
| 4 | Financial charges | ||||
| 5 | Administration | ||||
| 6 | Miscellaneous | 11,400,000 | |||
| 7 | Daily fixed cost (÷30) | 380,000 | |||
| 8 | Profitability per lb | ||||
| 9 | Net cost of raw material per lb | ||||
| 10 | Yarn price per lb (Rs 510 per 10 lb) | ||||
| 11 | Contribution per lb | 16.00 | |||
| 12 | Daily contribution (× bags × 100 lb) | 400,000 | |||
| 13 | Profit / (loss) per day | 20,000 | |||
| 14 | Profit / (loss) per month | 600,000 | |||
| 15 | Break-even bags per day | 237.5 | |||
blue = input (edit me)grey = formula (click to see it)
Weaving — 120 air-jet looms on 20×16/128×60 63″
| A | B | C | |||
|---|---|---|---|---|---|
| 1 | Daily production per loom (m) | ||||
| 2 | Total looms | ||||
| 3 | Daily production of the unit (m) | 60,000 | |||
| 4 | Monthly fixed cost | ||||
| 5 | Depreciation | ||||
| 6 | Financial charges | ||||
| 7 | Administration | ||||
| 8 | Miscellaneous | 14,400,000 | |||
| 9 | Daily fixed cost | 480,000 | |||
| 10 | Daily fixed cost per loom | 4,000 | |||
| 11 | Cost of yarn and other materials per metre | ||||
| 12 | Price per metre | ||||
| 13 | Contribution per metre | 9.00 | |||
| 14 | Daily contribution per loom | 4,500 | |||
| 15 | Profit / (loss) per day per loom | 500 | |||
| 16 | Profit / (loss) per day | 60,000 | |||
| 17 | Profit / (loss) per month | 1,800,000 | |||
| 18 | Break-even metres per loom per day | 444 | |||
blue = input (edit me)grey = formula (click to see it)
Dyeing — commission finishing of 50,000 m a day (medium colours)
| A | B | C | |
|---|---|---|---|
| 1 | Production per day (m) | ||
| 2 | Monthly fixed cost (dep 5.6M + fin 6.5M + admin 0.3M + misc 2.0M) | ||
| 3 | Daily fixed cost | 480,000 | |
| 4 | Fixed cost per metre | 9.60 | |
| 5 | Cost of dyes and chemicals per metre | ||
| 6 | Cost of utilities and misc per metre | ||
| 7 | Charges per metre | ||
| 8 | Contribution per metre | 12.00 | |
| 9 | Daily contribution | 600,000 | |
| 10 | Profit / (loss) per day | 120,000 | |
| 11 | Profit / (loss) per month | 3,600,000 | |
| 12 | Break-even metres per day | 40,000 |
blue = input (edit me)grey = formula (click to see it)
Exercise from the lecture: find the break-even point for each plant. The last row of each sheet now answers it — and shows how thin the margin is in weaving, where one rupee per metre on yarn price swings the shed from profit to loss.