# How to calculate break-even point of merged plant/company?

The question goes like this :

**Particulars             Plant A              Plant B**
Capacity utilization       70%                  60%

Sales                      150 mil.             90 mil.
Variable costs             105 mil.             75 mil.
Fixed costs                30 mil.              20 mil.


We are asked to calculate (i) the break-even point of plants before merger (ii) BEP of plants after merger which will have an additional fixed cost of \$2 million.

Here, BEP = (Fixed Costs/Contribution)* Sales
where, Contribution = Sales - Variable Cost

For the first part we can easily calculate the BEP using the formula.
However, for the second part we are required to take into consideration the capacity utilization also. (we scale it to 100% then solve)

Why do we do this only for the merged plant and not while calculating separately for different plants?

thanks