Effect of low rate operation

The operator of the smaller plant could not meet all the potential market but could operate at full output showing a profit flow of 6.37 million at the going market price for 2-ethylhexanol and a reasonable 8 1% return on his 

Plant capacity tonnes/year Available market tonnes Sales possible tonnes Sales income 690/tonne ( 000) 

Cash flow = Sales income — (Variable cost + Direct fixed + Indirect fixed)  

Sales kilotonnes/year) Income m/year) Variable cost ( m/year) Fixed cost m/year) Total cost m/year) Profit m/year) Variable cost m/year) Fixed cost m/year) Total cost ( m/year) Profit m/year) 

Breakeven 29 3 kilotonnes/year Return on capital at full capacity 8 1% 

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