Cost of production and profitability-


It  is the assessment of the earning capacity of the project. The unit should be in a position to manufacture the product at a reasonable cost and sell them at a reasonable price, which would allow adequate profit margin even in a competitive market. The profitability of an enterprise depends on the total cost of production and aggregate sale price of the output. The cost of production and sale estimates are also useful in working out the break-even point, the point at which the income sales would cover the working costs of the project. At this point the unit begins to make profit.



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