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  • A Study of the Operations Management at Holly Farm - an Ice Cream Manufacturing Company

     

    Essays5 Economics, Business

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ID number:355319
Evaluation:
Published: 01.12.1996.
Language: English
Level: Secondary school
Literature: n/a
References: Not used
Extract

4.6 Break Even Analysis
The profitability on my plan is not improved from 2003 result due to an increase in the percentage of the variable cost in the annual revenue. The main reason for the decreased profitability is the serious increase in extra payment for overtimes. While the break even point on my plan drops from 2003 result, the reason is a remarkable increase in total revenue in 2004. The margin of safety to unexpected decrease in total sales would be improved. The break even point on my plan is higher than one based on Gillian's optimistic plan. The reason is that Gillian assumed that they can increase farm shop sales with a £1 margin per litre of ice cream and £2 entrance fees (Table 15, Figure 8). However, as I mentioned in section 4.1.1, her forecast is unreliable. Therefore, the farm should withstand against the unprofitability in 2004 and should keep its growth strategy. Euromonitor plc. (2003) Euromonitor market research: Ice cream in the United Kingdom. London.

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