Question
Suppose, your company is planning for a cement factory, where the variable cost of producing 1000 begs of cement will be 3000 USD. With overcapacity
Suppose, your company is planning for a cement factory, where the variable cost of producing 1000 begs of cement will be 3000 USD. With overcapacity and high competition, cement manufacturers of Bangladesh currently try to sell their products at the lowest possible price. As a result, the profit margin is narrow for most cement companies. Your companys variable cost will be 30% of sales price. Calculate the accounting break even, if your Fixed cost will be 100,000 USD and depreciation is 30% of the fixed cost. What is the essential difference between sensitivity analysis and scenario analysis? How sensitivity analysis can contribute in project risk management? Provide detailed explanation.
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