tammylynn13 Posts: 1, Reputation: 1 New Member #1 Dec 7, 2013, 04:38 PM
How do you figure out annual unit sales volume?
I have been searching for a formula to determine the annual unit sales volume at which it would be indifferent between two manufacturing methods and have been unsuccessful.
 ebaines Posts: 12,131, Reputation: 1307 Expert #2 Dec 8, 2013, 07:16 AM
Assuming by "indifferent" you mean that both manufacturing techniques yield the same gross profit, and assuming that selling price isn't affected, then what you want is the point where (price - cost per unit) times volume is the same for both processes. If C_1 = average cost of manufacture per piece for method 1 and C_2 is average cost per piece for method 2, then:

(P-C_1) V_1 = (P-C_2) V_2

Or:

V_2 = (P-C_1)V_1/(P-C_2)

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