Tonne

s
0

Variable(
)
0

1000

4850

2000

9700

3000

14550

4000

19400

5000

24250

6000

29100

7000

33950

8000

38800

9000

43650

10000

48500

11000

53350

12000

58200

13000

63050

14000

67900

15000

72750

16000

77600

17000

82450

Fixed(
)
65537
5
65537
5
65537
5
65537
5
65537
5
65537
5
65537
5
65537
5
65537
5
65537
5
65537
5
65537
5
65537
5
65537
5
65537
5
65537
5
65537
5
65537
5

Sales(
)
0
59750
11950
0
17925
0
23900
0
29875
0
35850
0
41825
0
47800
0
53775
0
59750
0
65725
0
71700
0
77675
0
83650
0
89625
0
95600
0
10157
50

For the purpose of analysis a break even chart was constructed. The benefit of
the break even chart is that it informs of the operational capacity at which costs
are equal to revenure ie. No profit or loss and therefore determines the sales
required to begin to operate at a profit. It also helps decipher the distribution of
costs, be it fixed or variable.
The chart below illustrates that the prominent costs are accountable to the fixed
costs of the business. Although costs such as employee wages could appear in
the variable costs section it had been assumed that the employeess would be
payed a salary as all the jobs are required to be fulfilled independantly of sales,

consequently adding to the fixed costs. The fixed costs also comprised of the
maintenance of both the CHP and AD unit, insurance which will be an annual
occurrence and also the loan repayment. In the chart in question the interest on
the loan repayment was also considered to be a fixed cost although as the loan
repayment was deducted annually the interest repayment would reduce. This
approach allowed the simplification of the analysis and also the need to include
the five year CHP replacement costs.
Variable costs are made up of both utility and transport costs. These costs are
deemed directly attributable to the biogas produced and change relatively. From
the chart it is clear to see that these costs contribute only a small fraction of the
total costs. It can therefore be said that the businees is fixed cost based and
therefore requires a large number of sales to cover these costs. This equates to a
large contribution of 54.90 per tonne.
Initial observations show that fixed costs are covered with a feedstock of 11000
tonnes and total costs are covered just below 12000 tonnes. Therefore
processing feedstock greater than 12000 tonnes is profitable to the business.
Below 12000 tonnes of feedstock annually a loss occurs. The first years projected
processing of 10200 tonnes of feedstock falls short of this break even point, but
as company awareness increases will operate at at nearer 17000 tonnes. To
conclude the amount of waste required to break even would decrease annually
due to the decreasing interest repayment, but increase slightly in the years
concerened with the renewal of the CHP.This is evident on the cash flow graph.
Based on this analysis the business is deemed viable as operating at maximum
capacity will return roughly a 280000 profit per annum.

Break Even Chart

1200000
1000000
800000

Fixed()

600000

Variable +Fixed()

400000

Sales()

200000
0

Demand in Tonnes

Figure #. A Break Even Chart

#NVP analysis iv worked out NVP becomes positive between yrs 11 and 12