clean bold

8/2/2019 Clean Bold

http://slidepdf.com/reader/full/clean-bold 1/87

February 10,2009

FINAL PROJECT OF BUSINESS MATH

AcknowledgementAll praise and gratitude due to ALLAH ALMIGHTY who created man in His own image and

enjoyed upon him to travel on the earth and enter into a profound and analytical study of Universe

for spiritual appreciation of ALLAH’S unity and His attribute as well as for harnessing the material

manifestation of the world to the mankind’s profitable utilization. In the first place, therefore we

express our utmost thanks to ALLAH.

At the next stage I offer our gratitude to our Apostle and prospector Prophet Muhammad (P.B.U.H)

for his golden saying “Gain knowledge be in China”.

We are also grateful to Mr. Abid Awan (our course instructor), who gave us a project through

which we come to know Business Mathematics terms. How it will use in our daily life, the real

business transactions and how we can implement all Business Mathematics tools into real and exist

business.

He also contributed with his precious time for us to complete this report.

Group Name- Elegance

By: Elegance Group To: Mr. Abid Awan 1

8/2/2019 Clean Bold


February 10,2009


Executive Summary

The name we chose for our group is The Elegance. Our group

consists of three members. In this Project we have done

Cost Analysis of Uni trade Pvt. Ltd. We have covered the

following factor. Data Analysis, Cost Analysis, Mark up, Mark

down, Inventory analysis and differentiation. All these Factors

were equally divided among Group Members. The data was

personally collected by our group by paying a visit to Uni

trade Pvt. Ltd. Aggregate efforts of all members have made it

possible to complete the Project in Excellent manner within the

given Duration. Although each member was assigned differentduties but collectively this project is a combine effort of each

member.


8/2/2019 Clean Bold


February 10,2009


History!Fan is a daily use item. Its utility increases, especially in the summer season. The industry is

producing about 5 to 6 million fans per annum and meeting successfully the local as well as the

export demand. Out of the total production, approximately 30 per cent fans consist of pedestals, 7

per cent brackets and the remaining 63 per cent are ceiling fans. The industry belongs to the light

engineering industry category, and is one of the industries that existed at the time of independence.

In the early 1950s, it was declared as cottage industry and its more than 50 per cent units still fall in

this category.

Fan industry is mainly confined to Gujranwala and Gujrat cities of the Punjab province. The reason

for its remaining a cottage industry is that majority of the units do not have full facilities of

production under one roof. They usually give orders to the units having machines for different parts

like fan guards, blade castings, core laminations etc. These units have lathes, shapers, milling

machines, and power pressers, die casting machines and electroplating equipments. Therefore, most

of the units are simply assembling units. Thus, they do not give brand names to their products.

Pakistan:


8/2/2019 Clean Bold


February 10,2009


In 1999 domestic fans accounted for $1.09 million in foreign exchange earnings, which was

approximately 65.86% of total fans exports of Pakistan. The share has decreased from 76%,

which shows that Pakistan’s exports have higher growth rate in industrial fan exports. In

Pakistan, the domestic fans export has increased by an annual average of 82% in last

five years with a high growth in 1996 and 1999 i.e. by 123% and 205% respectively and a

decline in 1998 by 18%. Looking at the international perspective Pakistan’s share of the

domestic fans market has increased from 0.01% in 1995 to 0.10% in 1999.

For international comparisons the data used is for the year 1999. However, data

is also

available for Pakistan for the year 2000-2001, which shows that there has been

an increase in

exports from $1.09 million in 1999 to nearly $3.896 million in 2000-01- by more

than 257%

in last two years.

Some of the leading importers from Pakistan include Bangladesh, which

imported 47.8% of

Pakistan’s domestic fans, the Saudi Arabia, which imported nearly 18.7% and

UAE, which

shared 17.31% of the Pakistan exports of domestic fans in 1999.


8/2/2019 Clean Bold


February 10,2009


Domestic fans products can be subdivided into ceiling, pedestal, table, exhaust

and other

fans that are not specified. Looking at the break-up of Pakistani domestic fan

exports, it has

been found that about 70% of the total value exported is accounted by just one

category

which is pedestal fans.

Fan Industry in Pakistan

Fans have been manufactured in Pakistan since its inception in 1947 and all of

the fan

manufacturing is in the private sector. The fan industry is mainly clustered in

the four major

cities namely, Gujrat, Gujranwala, Lahore and Karachi. This cluster meets the

entire need of the


8/2/2019 Clean Bold


February 10,2009


country producing fans with extended product types, models, designs, and

colors. The

product line includes ceiling, pedestal, table bracket or circomatric, exhaust,

and louver fans.

Sales are also fairly concentrated with five large firms in Gujrat and two in

Gujranwala,

accounting for 40% of total industry sales. The present conditions of Fan

industry in Pakistan

are:

The industry can be classified into four segments on the basis of revenue

generation. The

large industry (high sales segment) comprises of 8 firms, with Rs. 250-350

million

investments in each firm, providing employment to 250 people on average.

Medium sales


8/2/2019 Clean Bold


February 10,2009


segment comprises of 50 firms. Each firm has an investment level of Rs. 5-10

million and is

providing employment to 100-250 people. Low sales segment also requires an

investment level of

Rs. 5-10 million. 100 firms come under this segment providing employment to

30-50 people on

average. The vendor segment provides employment to 5-20 people per firm and

requires an

investment of Rs. 0.45-1 million. Currently 1500 firms are operating within this

segment.

TABLE - I: EXPORT OF FANS (000 Rs)

Year Ceiling Pedestal

1989-90 134 1,289

1992-93 81,762 1,826

1993-94 18,636 15,137

1998-99 2,552 32,432

1999-00 15,689 66,370

2000-01 59,259 161,554

2001-02 208,963 183,613


8/2/2019 Clean Bold


February 10,2009


Source: Federal Bureau of Statistics.


8/2/2019 Clean Bold


February 10,2009


TABLE - II

PARTS OF FAN EXPORTED

(Million Rs.)

1998-99 4.2

1999-00 16.6

2000-01 109.7

2001-02 57.5

TABLE - III: FAN EXPORTS BY TYPE (Million Rs)

1998-99 1999-00 2000-01 2001-02

Ceiling Fans 2.6 15.7 59.3 208.9

Pedestal Fans 32.4 66.4 161.6 183.6

Table Fans 1.1 -- -- 0.9

Exhaust Fans 0.1 0.1 0.1 --

Other Fans 2.9 6.9 5.1 27.2

Fan Blowers 24.9 13.2 0.7 --

Other Fans n.s. 3.0 9.7 5.3 2.0

Total 45.0 42.0 232.1 422.6


8/2/2019 Clean Bold


February 10,2009



8/2/2019 Clean Bold


February 10,2009


TOTAL PRODUCTION ON DAILY BASISTotal production of the Bracket fans = 51 units

So share of the Bracket fans in the total production = 45/100 * 100 => 45%

Share of Super Deluxe in the total production of fans = 20/100*100 =>20%

Raw Materials: Raw materials are the main source in finding the cost of the Super DeluxeBracket Fan.

Table of Raw Materials

Sr.No. Item Name Unit Qty. Unit PriceAmount

1 Ball Bearing Pcs 2 25 50

2 Base Screws Pcs 5 0.3 1.5

3 Blade Pcs 1 115 115

4 Blade Paint Pcs 1 20 20

5 Bracket Fitting Pcs 1 12 12

6 Capacitor 2.5uf Pcs 1 14 147 Cotton tape, Petrol, sleeve and Paper etc Pcs 1 8 8

8 Enamel copper Wire Grm 345 0.45 155.25

9 Five core Cable 24 inch Pcs 1 12 12

10 Gear Greece Cup Pcs 1 1.75 1.75

11 Gear Lever Pcs 1 3.5 3.5

12 Gear Set Pcs 1 67 67

13 Goli Spring Pcs 1 1.5 1.5

14 Guard Pcs 1 140 140

15 Guard Blade Packing Pcs 1 3 3

16 Guard Mono Pcs 1 11 1117 Guard Ring Pcs 1 24 24

18 Labor Field Pcs 1 15 15

19 Light Pcs 1 20 20

20 Metal Base Plate Pcs 1 30 30

21 Misc. Items Name Printing Pcs 1 2 2

22 Motor Body Grm 425 0.145 61.625


8/2/2019 Clean Bold


February 10,2009


23 Motor Fitting Pcs 1 12 12

24 mounting Hook Pcs 1 9 9

25 Naka Pcs 1 56 56

26 Naka Clip Pcs 1 6 6

27 Naka Goli (Steel Balls) & Spring Pcs 1 0.5 0.5

28 Naka Nut & Bolt Pcs 1 3.75 3.75

29 Naka Spring Pcs 1 5 5

30 Name Plate Pcs 1 6 6

31 Packing Box (Base + Guard) Pcs 1 61 61

32 Packing Stickers Pcs 3 1 3

33 Plastic Base Pcs 1 61 61

34 Plastic Dome Pcs 1 40 40

35 Plastic Dome Plate Pcs 1 12 12

36 Pulling Knob Pcs 1 2 2

37 Rotor & Stator MS2 PcsSet 1 110 110

38 Screws & Packing Pcs 25 0.5 12.5

39 Shafting Pcs 1 35 35

40 Shoppers Pcs 3 3 9

41 Show Cup Pcs 1 7 7

42 Supply Cable Pcs 1 20 20

43 Switch Pcs 1 19 19

Total 1257.875


8/2/2019 Clean Bold


February 10,2009


Machine

MACHINE COST IS DETERMINED AS FIXED COST

5% is the Depreciation cost that would be charged. The Depreciation method is straight

Depreciation method. And is calculated on annual basis

Total Annual Depreciation Cost of Company machines are Rs.29350.


Type Of Machinery No. Of Machines DepressionCost on

annual basis

Total Cost of Machines at

time of

Purchase

TURNING3 11250 225,000

WINDING2

14250 285,000

COMPRESSOR 12250

45000

DRILLING 2 1600 32000

8/2/2019 Clean Bold


February 10,2009


Total Depreciation per day 29350/365 = Rs. 80.41

Total Cost of machines at the Time of purchase = Rs. 587000

About 5% of the cost of machines at time of purchase is added to the total cost of item produce in

the company in a monthly production that is 587000 X 5% = 29350The cost of machines allocated to the total daily production is = 29350/30 => Rs. 978.33

So total cost of machines of a company per day are 978.33 + 80.41 = Rs. 1058.74

Total daily production of the Super Deluxe = 20

Super Deluxe Share in the total production = 20%

Total cost of machines for the 20 Super Deluxe = 20% of 1058.74 =>Rs. 211.748

Labor:

Total Labor: 30

Departments No. of Labors in

each Department

Salary/Wages per

Person Per day (in

Rupees)

Cost Of labor

Per Day

(no. of labors

multiply salary)

Production

Department 20 200 4000

Productionsupervisor

3 250 750

Sales

Department2 500 1000

Marketing

Department2 400 800

Finance


Management

Department1 - -

Fixed Cost:

Fixed Cost Elements in labor

Total Fixed Cost of the Labors = Rs.7150 per day

Total production capacity of the company = 100 units per day


8/2/2019 Clean Bold


February 10,2009


Total share of the Super Deluxe in fixed labor cost =20% of 7150 => Rs. 1430 per day

Variable Cost:

Variable cost as production department labor = Rs. 4000Share of the Star fan in the total production = 20%

Charges to the production department of Super Deluxe department = 20% of 4000 => Rs.800

Charges of the production department on the one Super Deluxe = 800/20 => Rs.40.

Expenditures of the Production Department:

Variable Cost:

Total utility expenses per month= Rs 10,500

Total utility expenses per day = 10500/30=> Rs. 350

Total production capacity of the company (Uni trade Pvt. Ltd.) = 100unit per day

Total utility expenses to be charged to Super Deluxe department = 20% of 350=> Rs. 70

Total production of Super Deluxe per day = 20 units

Total cost of expenditures to be charged per Super Deluxe fan = 70/20 => Rs. 3.5


Expenditures Electricity

Bills

Cost Per month In

Rupees 10,500

8/2/2019 Clean Bold


February 10,2009


Expenditures of the FOH:

Fixed Cost:

Total factory overhead per month (utility expenses) = Rs. 11800

Factory Overhead per day 11800/30 = Rs. 393.33

Share of the Super Deluxe Department in the total share of the fan production = 20%

Overhead charged to the department = 20% of 393.33 => Rs.78.66

Total Cost = Total Fixed Cost + Total Variable Cost

Total Fixed Cost:


Expenditures Telephone Bills Other expenses

Cost Per

month In

Rupees

5800 6000

8/2/2019 Clean Bold


February 10,2009


• Total cost of machines for the 20 Super Deluxe = 20% of 1058.74 =>Rs. 211.748

• Total share of Super Deluxe the 20% in fixed labor cost =20% of 7150 => Rs. 1430 per

day

• Overhead charged to the department = 20% of 393.33 => Rs.78.66

Total Variable Cost:

• Cost of Raw material for producing one complete set of the Super Deluxe is Rs. 1257.88

• Charges of the production department on the one Super Deluxe = 800/20 => Rs.40.

• Total cost of expenditures to be charged per Super Deluxe fan = 70/20 => Rs.3.5

From the above calculations it is clear that the Rs.1720.408 (fixed cost) are to be charged forevery fan whether there is production or not.

The Rs.1301.38 (variable cost) depends on the number of units produced. It is for the

production of one unit. As number of units produced varies the variable cost also varies.

Variable cost is basically the fixed per unit cost.

Cost Function

Total cost = Fixed Cost + variable cost

C(x) = 1720.408+ 1301.38x

Revenue Function

Revenue = price x quantity

R(x) = 1405x

Profit Function:Profit = Revenue – Cost

= 1405x – (1720.408+ 1301.38x)

= 1405x – 1720.408 – 1301.38x

= 103.62x – 1720.408


8/2/2019 Clean Bold


February 10,2009


Break Even Analysis

Revenue = cost

1405x = 1720.408+ 1301.38x

103.62x = 1720.408

X = 17


8/2/2019 Clean Bold


February 10,2009


Quantity Demanded

Price Quantity Demanded Month

Rs. 1305 500 Units April

Rs. 1355 550 Units May

Rs. 1405 600 Units June

(1305)2 a + (1305) b + c = 500

1703025a + 1305b + c = 550 …………………………………. 1

(1355)2 a + (1355) b + c = 550

1836025a + 1355b +c = 550 ……………………………………2

(1405)2 a + (1405) b + c = 600

1974025a + 1405b + c = 600 …………………………….........3

Subtracting equation 2 by equation 1


Demand

8/2/2019 Clean Bold


February 10,2009


We get

133000a + 50b = 50 ……………………………………………4

Subtracting equation 3 by equation 2We get

138000a + 50b = 50…………………………………………….5

Now subtracting equation 5 by equation 4We get

5000a = 0a = 0

Putting value of “a” in equation 4We get

50b = 50

b = 1

Now putting the value of “a” an “b” in equation 1

1703025a + 1305b + c = 550

1703025(0) + 1305(1) + c = 550

1305 + c = 500

c = -805

Qd = p – 805


8/2/2019 Clean Bold


February 10,2009


Quality Supplied

Price Quantity supplied Month

Rs. 1305 390 Units April

Rs. 1355 450 Units May

Rs. 1405 520 Units June

Graph:

(1305)2 a + (1305) b + c = 390

1703025a + 1305b + c = 390 …………………………………. 1

(1355)2 a + (1355) b + c = 450

1836025a + 1355b +c = 450 ……………………………………2

(1405)2

a + (1405) b + c = 520

1974025a + 1405b + c = 520 …………………………….........3


We get


8/2/2019 Clean Bold


February 10,2009


133000a + 50b = 60 ……………………………………………4


We get

138000a + 50b = 70…………………………………………….5

Now subtracting equation 5 by equation 4

We get

5000a = 10

a = 0.002

Putting value of “a” in equation 4We get138000(0.002) + 50b = 70276 + 50b = 7050b = - 206b = - 4.12


1703025a + 1305b + c = 390

1703025(0.002) + 1305(-4.12) + c = 390

3406.05 – 5376.6 + c = 390

c = 390 + 1970.55

= 2360.55

Qs = 0.002p2 – 4.12p + 2360.55


8/2/2019 Clean Bold


February 10,2009


Qd = Qs

p – 805 = 0.002p2 – 4.12p + 2360.55

0.002p2 - 4.12p – p + 2360.55 + 805 = 0

0.002p2 – 5.12+ 3165.55 = 0

Quadratic Formula

P = - b + (b2 – 4ac) ½

2a

= 5.12 + (26.21 – 25.324) ½

0.004

= 5.12 + (0.886) ½

0.004

= 5.12 + 0.94

0.004

P = Rs.1516


8/2/2019 Clean Bold


February 10,2009


Cash Discount

A company XYZ that purchases Finished goods from Uni trade Pvt. Ltd which is of worth 0.2

Million Rupees. According to the companies policy they give a 10% discount on cash

purchased if paid after 15 days after delivery. If a company clears its balance amount before

15 days then according to the company’s policy they give 10% + 2% discount on the cash

payments. The illustration is as follows:

Price of finished Goods = Rs.200, 000

Discount given (if paid after 15 days) = 10%

If he pays after 15 days:

200000*10%= Rs.20, 000

So after 15 days the company will have to pay = Rs.1, 80,000


8/2/2019 Clean Bold


February 10,2009


Now condition 2

If he pays within 15 days

Discount given (if paid within 15 days) = 10%+2%

What 10% + 2% stands for?

This tells us that the discount of 10% is to be given in any case if the customer pays the amount

within 15 days. 2%will be given on the amount after 10% discount. See the illustration below

200000*10%= Rs. 20,000

Remaining amount= 1, 80,000

The next 2% will be given on the remaining amount.

Therefore

180000*2%=3600

So within 15 days the company will have to pay= Rs.1, 76,400

Difference between 12% and 10% + 2%:

As we have seen that on 10% + 2% discount the amount payable within 15 days is

Rs.1, 76,000

And if 12% discount is given on the cash purchased of 0.2 million Rupees within 15 days the

illustration is as follows:

200,000 * 12% = 24,000

So the amount payable after the cash discount = 200,000 – 24,000

= Rs.1, 76,000

This shows that there is a difference of Rs.400.


8/2/2019 Clean Bold


February 10,2009


True Annual Interest

The company Uni trade has purchased a machine which is of worth 0.6 Million Rupees. This

machine is called as Mould Injection Machine. The company is paying 1, 50000 as down

payment. And the remaining amount will be paid in 24 payments of 21,187.5 Rupees each. Thisis the contract signed between the two companies for the payment of this machine. The


Total Machine Cost = 0.6 Million Rupees

Total installment cost = down payment + (amount of each payment * number of payments)

Total installment cost = 1, 50,000 + (21187.5 * 24)

= 1, 50,000 + 50, 8500 = 6, 58,500 Rupees

This shows that we are paying Rs.6, 58,500 for the Mould injection Machine.

The finance charge is the difference between the total installment cost and the cash price.

Finance charge = Total installment cost – Cash Price

Finance Charge = 658500 – 600000

Finance Charge = Rs.58, 500

This is the interest paid by the company Uni trade for buying this machine because the company is purchasing this machine on credit.

Amount Finance = Cash Price – Down payment

Amount Finance = 6, 00,000 – 150000

Amount Financed = Rs.4, 50,000


8/2/2019 Clean Bold


February 10,2009


The company had paid Rs.1, 50,000 as the down payment and Rs.4, 50,000 will be paid in 24installments.

Annual Percent rate = 24 * finance charge / amount financed * (1 + total number of

Payments)

Annual Percent Rate = 24 * 58500 / 450000 * (1 + 24)

Annual Percent Rate = 1404000 / 11250000

Annual Percent Rate = 0.124 or 12.4 % approximately.


8/2/2019 Clean Bold


February 10,2009


Inventory Analysis

The company Uni trade is doing inventory analysis through weighted average method.

Since the cost of many items changes with time, there may be several of the same items

in stock that are purchased at different costs. For this reason, many businesses prefer

taking inventory at retail. The retail value of all identical items is the same.

The Weighted average method of inventory valuation involves finding the average cost of

an item and then multiplying the number of items remaining by the average cost per item.

This is done through Average inventory method


Date No. of units Price/Unit

April 3 124 items 1257.875

April 10

116 items 1026.1

April 20 103 items 1365.9

April 25 114 items 1257.875


8/2/2019 Clean Bold


February 10,2009


1. On April 3 the company is making 124 units at Rs.1257.875.

So According to the 124 * 1257.875 = Rs.155976.5

2. In April 10 the company is making 116 units at Rs.1026.1

116 * 1026.1= Rs.119027.6


103 * 1365.9= Rs.140687.7


114 * 1257.75= Rs.143383.5


109 * 1026.1 = Rs.111844.9

Total number of items in inventory: 566 Units

Total Value of the items: Rs.670920.2

Total inventory remaining at the end of the month: 210 Units

Average cost per item= 670920.2/566 = Rs.1185.37

The value of remaining Items= 1185.37 * 210 = Rs.248928

So at the end of year the total value of inventory remaining is of worth Rs.248928


8/2/2019 Clean Bold


February 10,2009


Unearned Interest:

The company Uni trade has purchased a machine which is of worth 0.6 Million Rupees.

This machine is called as Mould Injection Machine. The company is paying 1, 50,000 as down

payment. And the remaining amount will be paid in 24 payments of 21,187.5 Rupees each.

With 8 payments remaining, they decide to repay the loan in full.

So first of all we would have to find the amount of unearned interest

Company makes 24 payments, for total repayment = 24 * 21,187.5 = Rs.508500

Finance charge = Total installment cost – Cash Price

Finance Charge = 658500 – 600000

Finance Charge = Rs.58, 500

Unearned interest = Finance Charge* No. of payments remaining/Total no. of

Payments

x (1 + No. Of payments / (1 + Total no. of

Remaining) Payments)

Now putting the values

Unearned interest = 58500 x 8 x (1 + 8)/ 24 x (1 + 24)

= 58500 x 8 x 9/ 24 x 25

= Rs.7020

Now we have to find the amount required to pay in order to repay the loan in full. The


Number of payments remaining = 8

The amount of each payment = Rs.21, 187.5


8/2/2019 Clean Bold


February 10,2009


The amount of 8 payments = 8 x 21, 187.5 = Rs.1, 69,500

On paying the loan early the company Uni Trade Pvt. Ltd saves unearned interest of

Rs.7020. So

1, 69,500 – 7020 = Rs.1, 62,480

The amount to repay the loan in full is Rs.1, 62,480.


8/2/2019 Clean Bold


February 10,2009


Partial Loan Payoffs

Last year in 2008 the company Uni Trade faced some financial crises. They took loan

from a party (name not mentioned). The amount of loan was 1.6 million. A 90-day agreement

was made on 12th August 2008 which had a face value of 1.6 million and carried interest of

13%. On 16th September 2008, a payment of Rs.50, 000 was made. On 13th October 2008

another partial payment of Rs.20, 000 was made. If no additional payments are made, find the

amount that will due on maturity date.

The illustration is as follows

First of all we have to find the interest due from 12th August 2008 to 16th September 2008.

There are 35 days from 12th August 2008 to 16th September 2008.

The formula to calculate Interest is

I = PRT

I stands for Interest

P stands for Price

R stands for Rate

T stands for Time

I = 1, 60,000 x 0.13 x 35/360

= Rs.2022.22

Rs.2022.22 is the interest due.

The payment made on 16th September 2008 was Rs.50, 000. Of this amount Rs.2022.22 is

applied to interest. So the difference is as follows:

Rs.50, 000 Payment

-- Rs.2022.22 Interest Due

Rs.47977.78

This amount of Rs.47977.78 is applied to reduction of principal.


8/2/2019 Clean Bold


February 10,2009


So

Rs.1, 60,000 amount owed

-- Rs.47977.78 principle reduction

Rs.1,12,022.22

The balance owed on the note was Rs.1, 12,022.22.

On 13th October 2008 another partial payment was made.

Now again we have to find the interest due from 16th September 2008 to 13th October 2008

There are 27 days 16th September 2008 to 13th October 2008.

Again using the same formula

I = PRT


P stands for Price

R stands for Rate

T stands for Time

I = Rs.1, 12,022.22 x 0.13 x 27/360

= Rs.1092.22

Rs.1092.22 is the interest due.

The payment made on 13th October 2008was Rs.20, 000. Of this amount Rs.1092.22 is applied

to interest. So the difference is as follows:

Rs.20, 000 Payment

-- Rs.1092.22 Interest DueRs.18907.78

This amount of Rs.18907.78 is applied to reduction of principal.

So


8/2/2019 Clean Bold


February 10,2009


Rs.1, 12,022.22 amount owed

-- Rs.18907.78 principle reduction

Rs.93114.44

The balance owed on the note was Rs.93114.44.

The note was originally of 90 days. No more payments are made. So the remaining days are

90 – 35 – 27 = 28 days

28 days are still remaining. So the interest on 28 days will be

Again using the same formula

I = PRT


P stands for Price

R stands for Rate

T stands for Time

I = Rs.93114.44 x 0.13 x 28/360

= Rs.941.49

If no additional partial payments are made:

Rs.93114.44 principle owed

+ Rs.941.49 InterestRs.94055.93

The amount due on the maturity date of the note is Rs.94055.93.


8/2/2019 Clean Bold


February 10,2009


MARKUP ON COST

Markup is the difference between the cost and the selling price.

Most manufacturers, many wholesalers and some retailers calculate markup as a percent of

cost. Some retailers on the other hand compute markup on selling price.

Whether markup is based on cost or selling price, the same basic markup formula is always

used is

Cost

+ Markup

Selling price

The cost of one super Deluxe is Rs.1339 and it is sold for Rs.1405. Because the company is

calculating the percent of markup 11.69%on the cost. So the illustration is as follows

100% C Rs.1339

+ M

S Rs.1405

The amount of markup is the difference between Rs.1405 and Rs.1257.87.

100% C Rs.1339

+ M Rs.66

S Rs.1405

Now using the formula

Rate = Part/Base

Here the base is the cost of the fan and Base is the price of the markup.

Rate = Rs.66/Rs.1339

= 0.5 =5%

100% C Rs.1257.87

5 % + M Rs.147.13

105% S Rs.1405


8/2/2019 Clean Bold


February 10,2009


Markdown

The percent of markdown is always based on the original selling price.

Markdown in a factory occurs when the product does not sell at its marked price, the retailer

has order too much of the product. Or the products might have become damaged. It may also

occur due to seasonal changes.

The difference between the original selling price and the reduced selling price is called the

marked down. The selling price after the mark down is called the reduced price or actual

price.

The formula of markdown is as follows

Reduced price = Original price – Markdown

A super deluxe Bracket fan is normally selling for Rs.1405. It is markdown 15%. The reason of

the markdown was that the company needed some money quickly.

If we see above the cost of one unit of super deluxe it is Rs.1257.875. And the operating cost

which is incurred on one fan is 7% of the operating cost.

Now we have to find the operating loss and the absolute lost which has occurred due to the

markdown.

First we will find the operating loss

In order to find the operating loss first we have to find the break even pointThis is

Break-even point = (cost + operating cost)

= 1257.875 + (0.07 x 1257.875)

= Rs.1346

The reduce price will be

1405 – (1405 x 0.15)= 1405 – 210.75

= Rs.1194.25

So the operating loss is as follows

Break-even point – reduced price = operating loss


8/2/2019 Clean Bold


February 10,2009


1346 – 1194.25 = Rs.151.75 is the operating loss

Now we will find the absolute loss

The absolute loss is the difference between the cost and the reduced price.

Cost – reduced price = Absolute loss

1257.875 – 1194.25 = Rs.63.625


8/2/2019 Clean Bold


February 10,2009


Differentiation

Scenario 1 The Super deluxe Bracket fan has a profit function as follows in Uni trade Pvt.Ltd.

Profit Function

P = 103.62x – 1720.408

The company reaches break even point when it sales 17 products in a day.

What will be the average rate in change in the profit if the sale changes from 17 to 25 fans?

So according to the formula

Average Rate of change = f (change in sale) – f (previous sale)

change in sale - previous sale

So

= P (25) – P (17)

25 – 17

= (103.62(25) – 1720.408) – (103.62(17) – 1720.408)

25 – 17

= (2590.5 – 1720.408) – (1761.54 – 1720.408)

8

= 870.092 – 41.132

8

= 828.96/8

Average rate of change = Rs.103.62


8/2/2019 Clean Bold


February 10,2009


Scenario 2The Super deluxe Bracket fan has a profit function as follows in Uni trade

Pvt. Ltd.

Profit FunctionP = 103.62x – 1720.408

This profit function is telling us about how the profit is achieved. According to the formula

Profit = Cost – Revenue

So we want to find the Marginal profit which means that we have to find the profit per unit

sold.

The illustration is given as follows:

Again

Profit Function

P = 103.62x – 1720.408

Now we will take the first derivative of the profit function P.

P = 103.62x – 1720.408

P/ = 103.62

So the profit per unit sold is 103.62.


8/2/2019 Clean Bold


February 10,2009


Scenario 3The Super deluxe Bracket fan has a revenue function as follows in Uni trade Pvt. Ltd.

Revenue Function

R(x) = 1405x

The revenue function is achieved by multiplying the price of the product by its quantity.


Now we have to find the marginal revenue. Marginal revenue means revenue achieved per unit

sold. The illustration is as follows.

Revenue Function

R = 1405xNow we will take the first derivative of the revenue function

R = 1405x

R / = 1405

The revenue achieved on every unit is 1405.

Now if 20 Super Deluxe fans are sold the revenue will be as follows

X = 20

R(x) = 1405x

= 1405(20)

= Rs.28100


8/2/2019 Clean Bold


February 10,2009



8/2/2019 Clean Bold


February 10,2009


TOTAL PRODUCTION ON DAILY BASIS

Total production of the Bracket fans = 51 units


Share of Deluxe in the total production of fans = 15/100*100 =>15%


8/2/2019 Clean Bold


February 10,2009


Raw Materials:Raw materials are the main source in finding the cost of the Deluxe Bracket Fan.


8/2/2019 Clean Bold


February 10,2009



Table of Raw Materials

Sr.No. Item Name Unit Qty.UnitPrice Amount


2 Base Screws Pcs 5 0.3 1.53 Blade Pcs 1 115 115



6 Capacitor 2.5uf Pcs 1 8 8

7Cotton tape, Petrol, sleeve andPaper etc Pcs 1 8 8

8 Enamel copper Wire Grm 340 0.35 119



11 Gear Lever Pcs 1 3.5 3.5

12 Gear Set Pcs 1 60 60


14 Guard Pcs 1 120 120


16 Guard Mono Pcs 1 10 10

17 Guard Ring Pcs 1 24 24





22 Motor Body Grm 375 0.145 54.37523 Motor Fitting Pcs 1 12 12

24 Mounting Hook Pcs 1 9 9

25 Naka Pcs 1 56 56





30 Packing Box (Base+Guard) Pcs 1 45 45


32 Plastic Base 300 Grm Pcs 1 61 61

33 Plastic Dome Pcs 1 40 4034 Plastic Dome Plate Pcs 1 12 12







1092.375

8/2/2019 Clean Bold


February 10,2009


Machine




Total Annual Depreciation Cost of Company machines are Rs.29, 350.

Total Depreciation per day 29350/365 = Rs.80.41

Total Cost of machines at the Time of purchase = Rs.5, 87,000


the company in a monthly production that is 587000 X 5% = 29350

The cost of machines allocated to the total daily production is = 29350/30 => Rs.978.33

So total cost of machines of a company per day are 978.33 + 80.41 = Rs.1058.74

Total daily production of the Deluxe = 15

Deluxe Share in the total production = 15%

Total cost of machines for the 20 Deluxe= 15% of 1058.74 =>Rs.158.811


Type Of

Machinery

No. Of

Machin

es

Depression

Cost on

annual

basis

Total Cost

of Machines

at time of

Purchase

TURNING3 11250 225,000

WINDING

214250 285,000

COMPRESSOR 12250

45000

DRILLING

2 1600 32000

8/2/2019 Clean Bold


February 10,2009


Labor:

Total Labor: 30


each Department

Salary/Wages per

Person Per day (in

Rupees)

Cost Of labor

Per Day

(no. of labors

multiple salary)

Production


Production

supervisor3 250 750

Sales


Marketing

Department

2 400 800

Finance


Management

Department1 - -

Fixed Cost:

Fixed Cost Elements in labor (production supervisor, sales department, sales department,

marketing department, fiancé department, quality department & management department)



Total share of the Deluxe in fixed labor cost =15% of 7150 => Rs.107.25 per day

Variable Cost:

Variable cost as production department labor = Rs.4000

Share of the Deluxe fan in the total production = 15%

Charges to the production department of Deluxe department=15% of 4000 => Rs.600Charges of the production department on the one Deluxe fan = 600/15 => Rs.40


8/2/2019 Clean Bold


February 10,2009



Variable Cost:

Total utility expenses per month= Rs.10, 500

Total utility expenses per day = 10500/30=> Rs.350

Total production capacity of the company= 100unit per day

Total utility expenses to be charged to Deluxe department= 15% of 350=> Rs.52.5

Total production of Deluxe fan per day = 15 units

Total cost of expenditures to be charged per Deluxe fan = 52.5/15 => Rs.3.5



Bills

Cost Per

month In

Rupees

10,500

8/2/2019 Clean Bold


February 10,2009



Fixed Cost:

Total factory overhead per month (utility expenses) = Rs.11, 800

Factory Overhead per day 11800/30 = Rs.393.33

Share of the Deluxe Department in the total share of the fan production = 15%

Overhead charged to the department = 15% of 393.33 => Rs.59


Total Fixed Cost:

• Total cost of machines for the 15 Deluxe fans = 15% of 1058.74 =>Rs.158.811

• Total share of the 20% in fixed labor cost =15% of 7150 => Rs.1072.5 per day

• Overhead charged to the department = 15% of 393.33 => Rs.59


• Cost of Raw material for producing one complete set of the Deluxe fans is Rs.1092.375

• Charges of the production department on the one Deluxe fan = 600/15 => Rs.40.

• Total cost of expenditures to be charged per Deluxe fan = 52.5/15 => Rs.3.5


Expenditures Telephone Bills Other expensesCost Per month In Rupees

5800 6000

8/2/2019 Clean Bold


February 10,2009


From the above calculations it is clear that the Rs.1290.311 (fixed cost) are to be charged for

every fan whether there is production or not.

The Rs.1135.875 (variable cost) depends on the no of units produced. It is for the production of

one unit. As number of units produced varies the variable cost also varies. Variable cost isbasically the fixed per unit cost.

Cost Function


C(x) = 1290.311 + 1135.875x

Revenue Function


R(x) = 1300x

Profit Function

Profit = Revenue – Cost

= 1300x – (1290.311 + 1135.875x)

= 1300x – 1290.311 –1135.875x

P = 164.125x – 1132.811

Break Even Analysis

Revenue = cost

1300x = 1290.311 + 1135.875x

164.125x = 1290.311

X = 8


8/2/2019 Clean Bold


February 10,2009


Quantity Demanded


Rs.1200 350 Units April

Rs.1250 400 Units May

Rs.1300 450 Units June

Graph:

(1200)2 a + (1200) b + c = 350

1440000a + 1200b + c = 350 …………………………………. 1

(1250)2 a + (1250) b + c = 400

1562500a + 1250b +c = 400 ……………………………………2

(1300)2 a + (1300) b + c = 450

1690000a + 1300b + c = 450 …………………………….........3



8/2/2019 Clean Bold


February 10,2009


We get

122500a + 50b = 50 ……………………………………………4

Subtracting equation 3 by equation 2We get

127500a + 50b = 50…………………………………………….5


We get

5000a = 0a = 0


50b = 50

b = 1


1440000a + 1200b + c = 350

1440000(0) + 1200(1) + c = 350

c = 350 – 1200

c = -850

Qd = p – 850


8/2/2019 Clean Bold


February 10,2009


Quality Supplied





Graph:

(1200)2 a + (1200) b + c = 280

1440000a + 1200b + c = 280……………………………………. 1

(1250)2 a + (1250) b + c = 330

1562500a + 1250b +c = 330 ……………………………………2

(1300)2 a + (1300) b + c = 390

1690000a + 1300b + c = 390... ..…………………………….........3



8/2/2019 Clean Bold


February 10,2009


We get

122500a + 50b = 50 ……………………………………………4


We get

127500a + 50b = 60…………………………………………….5


We get

5000a = 10

a = 10/5000

a = 0.002


127500a + 50b = 60

127500(0.002) + 50b = 60

255 + 50b = 60

50b = 60 – 225

50b = - 195

b = - 3.9


1440000a + 1200b + c = 280

1440000(0.002) + 1200(-3.9) + c = 280

2880 – 4680 + c = 280

c = 280 + 1800

c = 2080

Qs = 0.002p2 – 3.9p + 2080

Qd = Qs


8/2/2019 Clean Bold


February 10,2009


p – 850 = 0.002p2 – 3.9p + 2080

0.002p2 – 3.9p + 2080 – p + 850 = 0

0.002p2 – 4.9p + 2930 = 0


8/2/2019 Clean Bold


February 10,2009


Quadratic FormulaP = - b + (b2 – 4ac) ½

2a

= 4.9 + (24.01 – 23.44) ½

0.004

= 4.9 + (0.57) ½

0.004

= 4.9 + 0.75

0.004

P = Rs.1414


8/2/2019 Clean Bold


February 10,2009


Inventory Analysis





The last-in-first-out (LIFO) method of inventory valuation assumes a flow of goods through the

inventory which is totally opposite to FIFO flows. The last goods to arrive are the first goods to be

sold.

This is done through last-in-first-out (LIFO) inventory method



April 3 124 items 1257.875

April 10

116 items 1026.1


April 25 114 items 1257.875


8/2/2019 Clean Bold


February 10,2009



So

April 30 109 fans at Rs.1026.1 = Rs.111844.9


111844.9 + 127045.375 = Rs.238890.275

The value of fans at the end of the end of the month is Rs.238890.275


8/2/2019 Clean Bold


February 10,2009


MARKUP ON COST





used is

Cost

+ Markup

Selling price

The cost of one super Deluxe is Rs.1147 and it is sold for Rs.1300. Because the company is

calculating the percent of markup on the cost. So the illustration is as follows

100% C Rs.1147

+ M

S Rs.1300

The amount of markup is the difference between Rs.1300 and Rs.1147.

100% C Rs.1147

+ M Rs.153

S Rs.1300


Rate = Part/Base


Rate = Rs.153/Rs.1147

= 0.13 =13.3%

100% C Rs.1147

13.3 % + M Rs.153


8/2/2019 Clean Bold


February 10,2009


113.3% S Rs.1300

Markdown







price.





If we see above the cost of one unit of Supreme it is Rs.1092.375. And the operating cost which

is incurred on one fan is 7% of the operating cost.


markdown.


In order to find the operating loss first we have to find the break even point

This is


= 1092.375+ (0.07 x 1092.375)

= Rs.1168.84


1300 – (1300 x 0.15)

= 1300 – 195

= Rs.1105



8/2/2019 Clean Bold


February 10,2009



1168.84– 1105= Rs.63.84 is the operating loss




1092.375 – 1105 = Rs.-12.625


8/2/2019 Clean Bold


February 10,2009


Differentiation

Scenario 1The Deluxe Bracket fan has a profit function as follows in Uni trade Pvt. Ltd.

Profit Function


P = 164.125x – 1132.811






So

= P (16) – P (8)

16 – 8

= (164.125(16) – 1132.811) – (164.125(8) – 1132.811)

16 – 8

= (2626 – 1132.811) – (1313 – 1132.811)

8

= 1493.189 – 180.189

8

= 1313/8



8/2/2019 Clean Bold


February 10,2009


Scenario 2

The Deluxe Bracket fan has a profit function as follows in Uni trade Pvt. Ltd.

Profit Function

P = 164.125x – 1132.811




sold.


Again

Profit Function

P = 164.125x – 1132.811


P = 164.125x – 1132.811P/ = 164.125



8/2/2019 Clean Bold


February 10,2009


Scenario 3The Super deluxe Bracket fan has a revenue function as follows in Uni trade Pvt. Ltd.

Revenue Function

R(x) = 1300x





Revenue Function

R = 1300xNow we will take the first derivative of the revenue function

R = 1300x

R / = 1300


Now if 15 Super Deluxe fans are sold the revenue will be as follows

X = 15

R(x) = 1300x

= 1300(15)

= Rs.19500


8/2/2019 Clean Bold


February 10,2009



8/2/2019 Clean Bold


February 10,2009


TOTAL PRODUCTION ON DAILY BASIS

Total production of the Bracket fans = 51 units


Share of Supreme in the total production of fans = 10/100*100 =>10%


8/2/2019 Clean Bold


February 10,2009


Raw Materials:

Raw materials are the main source in finding the cost of the Supreme Bracket Fan.


8/2/2019 Clean Bold


February 10,2009



Sr.No. Item Name Unit Qty.UnitPrice Amount


2 Base Screws Pcs 5 0.3 1.53 Blade Pcs 1 125 125



6 Capacitor 2.5uf Pcs 1 25 25

7Cotton tape, Petrol, sleeve andPaper etc Pcs 1 8 8

8 Enamel copper Wire Grm 360 0.45 162



11 Gear Lever Pcs 1 4.5 4.512 Gear Set Pcs 1 75 75


14 Guard Pcs 1 150 150


16 Guard Mono Pcs 1 11 11

17 Guard Ring Pcs 1 25 25





22 Motor Body Grm 425 0.175 74.37523 Motor Fitting Pcs 1 12 12

24 mounting Hook Pcs 1 9 9

25 Naka Pcs 1 60 60





30 Name Plate Pcs 1 6 6

31 Packing Box (Base+Guard) Pcs 1 70 70


33 Plastic Base 300 Grm Pcs 1 65 6534 Plastic Dome Pcs 1 40 40

35 Plastic Dome Plate Pcs 1 15 15

36 Pulling Knob Pcs 1 4 4




40 Shoppers Pcs 3 3 9




1395.375

8/2/2019 Clean Bold


February 10,2009


Machine




Total Annual Depreciation Cost of Company machines are Rs.29, 350.

Total Depreciation per day 29350/365 = Rs.80.41

Total Cost of machines at the Time of purchase = Rs.5, 87,000


the company in a monthly production that is 5, 87,000 X 5% = 29,350

The cost of machines allocated to the total daily production is = 29350/30 => Rs.978.33

So total cost of machines of a company per day are 978.33 + 80.41 = Rs.1058.74

Total daily production of the Supreme = 10

Supreme in the total production = 10%

Total cost of machines for the 10 Supreme = 10% of 1058.74 =>Rs.105.874


Type Of

Machinery

No. Of

Machin

es

Depression

Cost on

annual

basis

Total Cost

of Machines

at time of

Purchase

TURNING3 11250 225,000

WINDING

214250 285,000

COMPRESSOR 12250

45000

Drilling

2 1600 32000

8/2/2019 Clean Bold


February 10,2009


Labor:

Total Labor: 30


each Department

Salary/Wages per

Person Per day (in

Rupees)

Cost Of labor

Per Day

(no. of labors

multiple salary)

Production


Production

supervisor3 250 750

Sales


Marketing

Department

2 400 800

Finance


Management

Department1 - -

Fixed Cost:

Fixed Cost Elements in labor (production supervisor, sales department, sales department,

marketing department, fiancé department, quality department & management department)



Total share of the Supreme in fixed labor cost =10% of 7150 => Rs.715 per day

Variable Cost:

Variable cost as production department labor = Rs.4000

Share of the Supreme fan in the total production = 10%

Charges to the production department of Supreme department=10% of 4000 => Rs.400Charges of the production department on the one Supreme fan = 400/10 => Rs.40


8/2/2019 Clean Bold


February 10,2009



Variable Cost:

Total utility expenses per month= Rs.10,500

Total utility expenses per day = 10500/30=> Rs.350

Total production capacity of the company= 100unit per day

Total utility expenses to be charged to Supreme department= 10% of 350=> Rs.35

Total production of Supreme per day = 10 units

Total cost of expenditures to be charged per Supreme fan = 35/10 => Rs.3.5


Fixed Cost:

Total factory overhead per month (utility expenses) = Rs.11800Factory Overhead per day 11800/30 = Rs.393.33

Share of the Supreme Department in the total share of the fan production = 15%

Overhead charged to the department = 10% of 393.33 => Rs.39.33




Bills

Cost Per

month In

Rupees

10,500

Expenditures Telephone Bills Other expenses

Cost Per

month In

Rupees

5800 6000

8/2/2019 Clean Bold


February 10,2009


Total Fixed Cost:

• Total cost of machines for the 10 Supreme fans = 10% of 1058.74 =>Rs.105.87

•Total share of the 10% in fixed labor cost =10% of 7150 => Rs.715per day

• Overhead charged to the department = 10% of 393.33 => Rs.39.33


• Cost of Raw material for producing one complete set of the Supreme is Rs.1395.375

• Charges of the production department on the one Supreme fan = 400/10 => Rs.40.

• Total cost of expenditures to be charged per Supreme fan = 35/10 => Rs.3.5

From the above calculations it is clear that the Rs.860.2 (fixed cost) are to be charged for every

fan whether there is production or not.

The Rs.1438.875 (variable cost) depends on the no of units produced. It is for the production of

one unit. As number of units produced varies the variable cost also varies. Variable cost is

basically the fixed per unit cost.

Cost Function


C(x) = 860.2 + 1438.875 x


8/2/2019 Clean Bold


February 10,2009


Revenue Function


R(x) = 1575x

Profit Function


= 1575x – (860.2 + 1438.875 x)

= 1575x – 860.2 -- 1438.875 x

= 136.125x – 855.2

Break Even Analysis

Revenue = cost

1575x = 860.2 + 1438.875 x

136.125x = 860.2

X = 7 units


8/2/2019 Clean Bold


February 10,2009


Quantity Demanded





Graph:


8/2/2019 Clean Bold


February 10,2009


(1475)2 a + (1475) b + c = 200

2175625a + 1475b + c = 200 …………………1

(1525)

2

a + (1525) b + c = 2502325625a + 1525b + c = 250 ………………….2

(1575)2 a + (1575) b + c = 300

2480625a + 1575b + c = 300 …………………3


We get

1, 50,000a + 50b = 50 ………………………..4


We get

155,000a + 50b = 50 …………………………5


8/2/2019 Clean Bold


February 10,2009



We get

5000a = 0

a = 0


50b = 50

b = 1


2175625(0) + 1475(1) + c = 200

c = 200 – 1475

c = --1275

Qd = p - 1275


8/2/2019 Clean Bold


February 10,2009


Quality Supplied





Graph:

(1475)2 a + (1475) b + c =150

2175625a + 1475b + c = 150 …………………1

(1525)2 a + (1525) b + c = 200

2325625a + 1525b + c = 200 ………………….2

(1575)2 a + (1575) b + c = 260

2480625a + 1575b + c = 260 …………………3


8/2/2019 Clean Bold


February 10,2009



We get

150,000a + 50b = 50 …………………………..4


We get

155000a + 50b = 60 …………………………...5


We get

5000a = 10a = 10/ 5000

a = 0.002

Putting value of “a” in equation 4

We get

150,000(0.002) + 50b = 50310 + 50b = 60

50b = 60 – 31050b = - 250 b = - 250/50

b = - 5


2175625(0.002) + 1475(-5) + c = 150

4351.25 – 7375 + c = 150

- 3023.75 + c = 150

c = 3173.75

Qs = 0.002p2 – 5p + 3173.75


8/2/2019 Clean Bold


February 10,2009


Qd = Qs

p – 1275 = 0.002p2 – 5p + 3173.75

0.002p2 – 5p –p + 3173.75 + 1275 =0

0.002p2 – 6p +4448.75 = 0

Quadratic Formula

P = - b + (b2 – 4ac) 1/2

2a

P = 6 + (36 – 35.590)1/2

0.004

P = 6 + (0.41)1/2

0.004

P = 6 + 0.640.004

P = 1660 Rupees


8/2/2019 Clean Bold


February 10,2009


Inventory Analysis





The first-in-first-out (FIFO) method of inventory valuation assumes a natural flow of goods through

the inventory. The first goods to arrive are the fires goods to be sold. So the in this way the last items

are the items remaining in the inventory.

This is done through first-in-first-out (FIFO) inventory method




April 3 124 items 1257.875

April 10

116 items 1026.1


April 25 114 items 1257.875


8/2/2019 Clean Bold


February 10,2009


So



155976.5 + 88244.6 = Rs.244221.1

The value of fans at the end of the end of the month is Rs.244221.1


8/2/2019 Clean Bold


February 10,2009


MARKUP ON COST





used is

Cost

+ Markup

Selling price

The cost of one super Deluxe is Rs.1464.75 and it is sold for Rs.1575. Because the company is

calculating the percent of markup on the cost. So the illustration is as follows

100% C Rs.1464.75

+ M

S Rs.1575

The amount of markup is the difference between Rs.1575 and Rs.1464.75.

100% C Rs.1464.75

+ M Rs.110.25

S Rs.1575


Rate = Part/Base


Rate = Rs.110.25/Rs.1464.75

= 0.075 =7.5%

100% C Rs.1464.75

7.5 % + M Rs.110.25


8/2/2019 Clean Bold


February 10,2009


107.5% S Rs.1575

Markdown







price.





If we see above the cost of one unit of Supreme it is Rs.1395.375. And the operating cost which

is incurred on one fan is 7% of the operating cost.


markdown.


In order to find the operating loss first we have to find the break even point

This is


= 1395.375+ (0.07 x 1395.375)

= Rs.1493.05


1575 – (1575 x 0.15)

= 1575 – 236.25

= Rs.1338.75



8/2/2019 Clean Bold


February 10,2009



1493.05 – 1338.75= Rs.154.3 is the operating loss




1395.375 – 1338.75= Rs.56.625


8/2/2019 Clean Bold


February 10,2009


Scenario 1The Supreme Bracket fan has a profit function as follows in Uni trade Pvt.

Ltd.

Profit FunctionProfit = Revenue – Cost

P = 136.125x – 855.2






So,

= P (20) – P (7)

20 – 7

= (136.125(20) – 855.2) – (136.125(7) – 855.2)

20 – 7

= (2722.5 – 855.2) – (952.875 – 855.2)

13

= 1867.3 – 97.675

13

= 1769.625/13



8/2/2019 Clean Bold


February 10,2009


Scenario 2The Supreme Bracket fan has a profit function as follows in Uni trade Pvt. Ltd.

Profit Function

P = 136.125x – 855.2




sold.


Again

Profit Function

P = 136.125x – 855.2


P = 136.125x – 855.2P/ = 136.125



8/2/2019 Clean Bold


February 10,2009


Scenario 3

The Supreme Bracket fan has a revenue function as follows in Uni trade Pvt. Ltd.

Revenue Function

R(x) = 1575x





Revenue FunctionR(x) = 1575x

Now we will take the first derivative of the revenue function

R = 1575x

R / = 1575


Now if 15 Supreme fans are sold the revenue will be as follows

X = 15

R(x) = 1575x

= 1575(15)

= Rs.23625


8/2/2019 Clean Bold


February 10,2009


Suggestions

After completing the task which was given in the project our suggestions (as a group) to the

company are as given as follows:

1. The company is basically new and is supplying its fans to other renowned companies

like G.F.C, Pak Fans, Royal Fans, Macro Fans, Super Asia, etc. The company should

try to directly supply the finished goods to the distributors.

2. The company can reduce its cost of production by increasing the number of units

produced in a day.3. The company should increase its product line in order to come in competition.

4. The company should change their goal.

5. The company should focus more on its employees.

6. The company can reduce price and earn healthy profits by controlling their expenses.

7.

clean bold

Documents