1. BUSINESS MATHEMATICS & STATISTICS

2. LECTURE 22 Review Lecture 21 Perform linear cost-volume profit and break-even analysis. Using Microsoft Excel

8. Scenario 2-4 FC = Rs. 3136 VC = Rs. 157 S= Rs. 185 Capacity = 320 units Determine the NI of 134 units are sold! Formula for Net Income NI = #Units above BEP*CM = BEP(in units)/PC*100 Step 1… Find CM S = 185 VC = -157 CM = Rs. 28 (CM of Rs.28 per unit)

9. Scenario 2-4 Step 2… Find BEP in units = FC/CM = Rs. 3136/ Rs. 28 = 112 Units Step 3… Find units over BEP Units Sold 134 BEP 112 Over BEP 22 Hence: Company had a NI of 22 * Rs. 28 = Rs. 616

10. Scenario 2-5 FC = Rs. 3136 VC = Rs.157 S= Rs.185 Capacity = 320 units What unit sales will generate NI of Rs. 2000? Formula for Net Income #Units above BEP = NI/CM Step 1… Find CM S = 185 VC = -157 CM = Rs. 28 (CM of Rs.28 per unit)

11. Scenario 2-5 Step 2… Find BEP in units = FC/CM = Rs. 3136/ Rs. 28 = 112 Units Step 3… Find units over BEP NI/CM = Rs. 2000/Rs. 28 per Unit = 72 Units above Break Even Hence: 72 Units above BEP + 112 BEP Units = Total Sales Units = 184

13. Scenario 2-6 FC = Rs. 3136 VC = Rs.157 S= Rs.185 Capacity = 320 units What are the unit sales if there is a Net Loss of Rs.336? Formula # Units below BEP = (NI)/CM Step 1… Find CM S = 185 VC = -157 CM = Rs. 28 (CM of Rs.28 per unit)

14. Scenario 2-6 Step 2… Find BEP in units = FC/CM = Rs. 3136/ Rs. 28 = 112 Units Step 3… Find units below BEP NI/CM = Rs. 336/Rs. 28 per Unit = 12 Units below Break Even Hence: 112 BEP - 12 Units Below = Total Sales Units = 100

16. Scenario 2-7 FC = Rs. 3136 VC = Rs.157 S= Rs.185 Capacity = 320 units The company operates at 85% capacity. Find the Profit or Loss. Formula # units above BEP *CM = NI Step 1… Find CM S = 185 VC = -157 CM = Rs. 28 (CM of Rs.28 per unit)

17. Scenario 2-7 Step 2… Find BEP in units = FC/CM = Rs. 3136/ Rs. 28 = 112 Units Step 3… Find units over BEP 320*.85 = 272 Units Production 272 BEP 112 Over BEP 160 Hence: 160 Units * 28 = Profit 4480 Rs.

19. Case Company A’s year end operating results were as follows: Total Sales of Rs. 375,000 Operated at 75% of capacity Total Variable Costs were Rs. 150,000 Total Fixed Costs were Rs. 180,000 What was Company A’s BEP expressed in rupees of sales?

20. BUSINESS MATHEMATICS & STATISTICS

21. Case Total Sales = S = 375,000 Rs. Operated at 75% of capacity Total Variable Costs = VC = 150,000 Rs. Total Fixed Costs = FC =were 180,000 Rs. BEP in Rs. of sales? What information is needed to calculate the Rs. BEP? 1.Number of Units sold 2. VC per Unit 3. CM 4. Total Costs 5. BEP in Rs.

22. Case S = 375,000 Rs. 75% of PC VC = 150,000 Rs. FC =180,000 Rs. BEP in Rs. of sales? 1.Number of Units sold Let S = Rs.1 and X be the Number of Rs. 1 Units sold Sales of Rs. 375,000 = 375,000 Total Units sold

23. Case 2.VC per Unit Total VC Total Unit Sales = 150000 Rs. 375000 = Rs. 0.40 pu 3. CM S 1.00 VC -.40 CM 0.60 Rs.

24. Case 4. Total Costs TC = FC + VC = Rs. 180 000 + 0.40X 5. BEP in Rs. Rs. BEP in Rs. = (FC/CM)*S = (Rs. 180000/0.60)*Rs.1.00 = 300000*1 =300000 Rs.

25. BUSINESS MATHEMATICS & STATISTICS