Subject:Business Enterpreunership

Muhammed Samsuzzaman E mail: [email protected]

Senior Teacher

Kakoli High SchoolSchool E mail: [email protected]

Web address: www.kakolihighschool.com

Subject:Busin

ess Enterpreunersh

ip

Let’s watch the picture

What is your evaluation?

Make profit

Today’s Lesson

Profit Planning Analysis

If a seller sold a product at Tk. 50

If its cost is Tk. 40

Find out profit?

Tk. 10

Profit = Sales price – Cost price

Oppositely

Loss = Cost – sales

Cost

1. Fixed cost 2. Variable cost

Rent

Insurance

Salary Labor

Material

Factory OH

Sales price per unit

Variable cost per unit

Contribution Margin per unit

SP

VC

CM

Lenovo company sold a product at Tk. 20 , its variable Cost per unit Tk. 12 and Fixed cost Total

Tk. 20,000

Sales price per unit

Variable cost per unit

Tk. 20

Tk. 12

Contribution Margin per unit Tk. 8

SP

VC

CM

CM = -SP VC

So we find that Tk. 8 is earn from one unit. It is not profit. Carefully think that we deduct only variable cost. Fixed cost totally denied. But we have to deduct fixed cost to find out actual profit . Fixed cost is Tk. 20,000 . How many units need to sale to cover this fixed cost Tk. 20,000?

Tk 8 earn from 1 unit

Tk 20,000 earn from __________ unit

Yes!

Tk. 20,000

Tk. 8

Fixed cost

Contribution margin per unit

2500 unit

Fixed cost

Contribution margin per unit

Break even point =

Sales (2500X20) = 50,000

Less , Variable cost(2500 X 12) = 30,000

Contribution Margin = 20,000

Less , Fixed Cost = 20,000

Profit = 0

Income statement for 2500 unit

So, we found that Break Even Point (BEP) is a point where no profit and no loss.

0 500 1000 1500 2000 2500 3000

60,000

50,000

40,000

30,000

20,000

10,000

0

Taka

Unit

FC

Sales Line

Variable cost Line

Sales per unit Tk. 60 Variable per unit Tk. 40 , Fixed Cost Tk. 80,000 .

i) What Is CM?ii) What is Break even point and Break even sales?iii) If the company wants to make profit Tk. 20,000. How

many unit must be sold?

Evaluation

CM = SALES PER UNIT – VARIABLE COST PER UNIT = 60 – 40 = 20

BEP = FC / CM per unit = 80,000 / 20 = 4000 unit.

Break even sales = 4000 unit X 60 = 2,40,000.

Target sale = ( FC + Desire Profit)/ CM per unit = (80,000+ 60,000) / 20 = 7,000 unit

Optical company sold a unit at Tk. 100 , its variable Cost per unit Tk. 80 and Fixed cost Total Tk. 1,20,000.

i) Find out BEP ?Ii) If The Company wants to make a

Profit Tk. 60,000 how many unit must be sold?

Iii) Draw a break even chart.

Home work

Thanks To All .

?Sales Tk. 50

Cost Tk. 40 Tk. 10Profit