MorDates plans to open a 400 Mega Tonne capacity plant. The total initial cost of investment is approximately $ 219,000.
Approximate Initial Investment Cost to build a date plant with the capacity of 400 Mega Tonne / year ItemCost ($)
Land Purchase 17,000
Misc. Materials 37,000
Trucks & Transportation 31,000
Cold Storage Units 33,000
Office Supplies 1,000
Once the plant starts to operate, the total cost to treat and pack dates is calculated by adding the initial investment cost to the variable cost for each tonne of dates treated, packaged, and sold.
Breakeven point of the date plant
Initial Investment Cost$ 219,000
Variable cost (per ton)$ 4,500
Average Selling Price (per ton)$ 6,200
Production (ton) to reach breakeven point122
Total Production Cost$ 768,000
Total Revenue$ 768,000
Profit (per ton) after breakeven point$ 1,700
The above information depicts that if the plant sells 122 mega tonnes of dates to the domestic market at an average selling price of $6,200/MT, it will breakeven, that is, its revenues will surpass the initial investment cost. At this point, MorDates could make an estimated profit of $ 1,700 for each MT of dates sold.
According to the World Bank, “Morocco has one of the “worst” indices for rigidity of labour, including minimum wages and firing costs.” High labour cost weakens competitiveness and encourage informality. Since labour costs...