Scenario Summary

40k 45k 50k

Plan-A 160,000 180,000 200,000
Plan-B 176,000 198,000 220,000
Ad. Cost included Plan-A 150,000 170,000 190,000
Ad. Cost included Ad. Cost included Plan-B 166,000 188,000 210,000

Plan comparision
350,000

300,000

250,000

200,000

150,000

100,000

50,000

-
40k 45k 50k 55k 60k 65k 70k

Pl a n-A Pla n-B Ad. Cost incl uded Pl an-A Ad. Cost i ncl uded Pl an-B
 55k 60k 65k 70k
220,000 240,000 260,000 280,000
242,000 264,000 286,000 308,000
210,000 230,000 230,000 250,000
232,000 254,000 256,000 278,000

70k

i ncluded Pl an-B
Category Cost Category Cost
Rent 60,000.00 Raw Material 15.00
Salaries 200,000.00 Utility 5.00
Advertising Expenditure 80,000.00 Total 20.00
Misc. 20,000.00
Total Fixed cost 360,000.00 Sales Volume B 20000
Total Fixed Cost w/o Ad. 280,000.00 Sales Price 25.00
Ad Cost inclusive
Break-Even Sales Volume Plan-A 85000 52500
Break-Even Sales Volume Plan-B 79091 43182

1. Below chart demonstrates that at no point both plans yields Same return.
2. Plan B is the best option consider more profits at less Qty.

Plan comparision
350,000

300,000

250,000

200,000

150,000

100,000

50,000

-
40k 45k 50k 55k 60k 65k 70k
Pla n-A Pla n-B
Ad. Cost included Pla n-A Ad. Cost included Pl an-B
 Plan-A
Category Sales Price Variable Cost (Unit) Contribution to Margin Break Even Sales
Plan-A <=20K 25.00 20.00 5.00 100,000.00
Plan-A >20K 25.00 21.00 4.00 260,000.00
Total 360,000.00
Revised Qty to be sold based on Adv. Cost 4 210,000.00

Plan-B
Category Sales Price Variable Cost (Unit) Contribution to Margin Break Even Sales
Plan-B <=20K 25.00 20.00 5.00 100,000.00
Plan-B ( 20K to 60K) 25.00 20.60 4.40 260,000.00
Plan-B > 60K 25.00 21.50 3.50 -
Total 360,000.00
Revised Qty to be sold based on Adv. Cost 4.4 190,000.00

Sales Qty 45000

Analysis With out Separate Advertisement cost Button 1
plan Unit profit Total Profit
plan-a 4 180000
Plan-b 4.4 198000

one answer is that at 92,000 profit for both the plans are same..
 Sales Qty Required Ad. Cost
20000 5,000.00
65000 30,000.00
85000 30,000.00
52500

Sales Qty Required Ad. Cost

20000 5,000.00
59091 10,000.00
0
79091 10,000.00
43182

n 1