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February 10, 2009
FINAL PROJECT OF BUSINESS MATH
Acknowledgement
All 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 ALLAHS unity and His attribute as well as for harnessing the material manifestation of the world to the mankinds 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
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 different duties but collectively this project is a combine effort of each member.
By: Elegance Group
To: Mr. Abid Awan
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:
By: Elegance Group
To: Mr. Abid Awan 3
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 Pakistans 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 Pakistans 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 Pakistans 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.
By: Elegance Group
To: Mr. Abid Awan
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
By: Elegance Group
To: Mr. Abid Awan
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
By: Elegance Group
To: Mr. Abid Awan
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
By: Elegance Group
To: Mr. Abid Awan
February 10, 2009

Source: Federal Bureau of Statistics.
By: Elegance Group
To: Mr. Abid Awan
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
By: Elegance Group
To: Mr. Abid Awan
February 10, 2009
By: Elegance Group
To: Mr. Abid Awan
10
February 10, 2009
TOTAL PRODUCTION ON DAILY BASIS

Total 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 Deluxe Bracket Fan.
Table of Raw Materials Sr.No. Item Name Unit 1 Ball Bearing Pcs 2 Base Screws Pcs 3 Blade Pcs 4 Blade Paint Pcs 5 Bracket Fitting Pcs 6 Capacitor 2.5uf Pcs 7 Cotton tape, Petrol, sleeve and Paper etc Pcs 8 Enamel copper Wire Grm 9 Five core Cable 24 inch Pcs 10 Gear Greece Cup Pcs 11 Gear Lever Pcs 12 Gear Set Pcs 13 Goli Spring Pcs 14 Guard Pcs 15 Guard Blade Packing Pcs 16 Guard Mono Pcs 17 Guard Ring Pcs 18 Labor Field Pcs 19 Light Pcs 20 Metal Base Plate Pcs 21 Misc. Items Name Printing Pcs 22 Motor Body Grm
Qty. 2 5 1 1 1 1 1 345 1 1 1 1 1 1 1 1 1 1 1 1 1 425
Unit Price Amount 25 50 0.3 1.5 115 115 20 20 12 12 14 14 8 8 0.45 155.25 12 12 1.75 1.75 3.5 3.5 67 67 1.5 1.5 140 140 3 3 11 11 24 24 15 15 20 20 30 30 2 2 0.145 61.625 To: Mr. Abid Awan 11
By: Elegance Group
February 10, 2009 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 Motor Fitting mounting Hook Naka Naka Clip Naka Goli (Steel Balls) & Spring Naka Nut & Bolt Naka Spring Name Plate Packing Box (Base + Guard) Packing Stickers Plastic Base Plastic Dome Plastic Dome Plate Pulling Knob Rotor & Stator MS Screws & Packing Shafting Shoppers Show Cup Supply Cable Switch Total
FINAL PROJECT OF BUSINESS MATH Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs 2 Pcs Set Pcs Pcs Pcs Pcs Pcs Pcs 1 1 1 1 1 1 1 1 1 3 1 1 1 1 1 25 1 3 1 1 1 12 9 56 6 0.5 3.75 5 6 61 1 61 40 12 2 110 0.5 35 3 7 20 19 12 9 56 6 0.5 3.75 5 6 61 3 61 40 12 2 110 12.5 35 9 7 20 19 1257.875
By: Elegance Group
To: Mr. Abid Awan
12
February 10, 2009
Machine
Type Of Machinery No. Of Machines Depression Cost on annual basis 11250 14250 2250 Total Cost of Machines at time of Purchase 225,000 285,000 45000 32000
TURNING WINDING COMPRESSOR DRILLING 2
3 2
1600
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.
By: Elegance Group
To: Mr. Abid Awan
13
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% = 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 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) 200 250 500 400 300 Cost Of labor Per Day (no. of labors multiply salary) 4000 750 1000 800 600 -
Production Department Production supervisor Sales Department Marketing Department Finance Department Management Department Fixed Cost: Fixed Cost Elements in labor
20 3 2 2 2 1
Total Fixed Cost of the Labors = Rs.7150 per day Total production capacity of the company = 100 units per day
By: Elegance Group
To: Mr. Abid Awan
14
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. 4000 Share 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:

Expenditures Cost Per month In Rupees 10,500 Electricity Bills
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
By: Elegance Group
To: Mr. Abid Awan
15
February 10, 2009
Expenditures of the FOH:

Expenditures Cost Per month In Rupees Telephone Bills 5800 Other expenses 6000
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:
By: Elegance Group
To: Mr. Abid Awan
16
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 for every 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
By: Elegance Group
To: Mr. Abid Awan
17
February 10, 2009
Break Even Analysis

Revenue = cost 1405x = 1720.408+ 1301.38x 103.62x = 1720.408 X = 17
By: Elegance Group
To: Mr. Abid Awan
18
February 10, 2009
Quantity Demanded
Price Rs. 1305 Rs. 1355 Rs. 1405 Quantity Demanded 500 Units 550 Units 600 Units Month April May June
Demand
(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
By: Elegance Group
To: Mr. Abid Awan
19
February 10, 2009 We get
133000a + 50b = 50 4 Subtracting equation 3 by equation 2 We get 138000a + 50b = 50.5 Now subtracting equation 5 by equation 4 We get 5000a = 0 a=0 Putting value of a in equation 4 We 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
By: Elegance Group
To: Mr. Abid Awan
20
February 10, 2009
Quality Supplied
Price Rs. 1305 Rs. 1355 Rs. 1405 Quantity supplied 390 Units 450 Units 520 Units Month April May June
Graph:
Subtracting equation 2 by equation 1 We get
By: Elegance Group
To: Mr. Abid Awan
21
February 10, 2009
133000a + 50b = 60 4 Subtracting equation 3 by equation 2 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 4 We get 138000(0.002) + 50b = 70 276 + 50b = 70 50b = - 206 b = - 4.12 Now putting the value of a an b in equation 1 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
By: Elegance Group
To: Mr. Abid Awan
22
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) 2a = 5.12 + (26.21 25.324) 0.004 = 5.12 + (0.886) 0.004 = 5.12 + 0.94 0.004 P = Rs.1516
By: Elegance Group
To: Mr. Abid Awan
23
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 companys 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
By: Elegance Group
To: Mr. Abid Awan
24
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.
By: Elegance Group
To: Mr. Abid Awan
25
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. This is the contract signed between the two companies for the payment of this machine. The illustration is as follows: 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
By: Elegance Group
To: Mr. Abid Awan
26
February 10, 2009
The company had paid Rs.1, 50,000 as the down payment and Rs.4, 50,000 will be paid in 24 installments. 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.
By: Elegance Group
To: Mr. Abid Awan
27
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 April 3 April 10 April 20 April 25 April 30
No. of units 124 items 116 items
Price/Unit 1257.875 1026.1 1365.9 1257.875 1026.1
103 items 114 items 109 items
By: Elegance Group
To: Mr. Abid Awan
28
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 3. In April 20 the company is making 103 units at Rs.1365.9 103 * 1365.9= Rs.140687.7 4. In April 25 the company is making 114 units at Rs.1257.75 114 * 1257.75= Rs.143383.5 5. In April 30 the company is making 109 units at Rs.1026.1 109 * 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
By: Elegance Group
To: Mr. Abid Awan
29
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 illustration is as follows: Number of payments remaining = 8 The amount of each payment = Rs.21, 187.5
By: Elegance Group
To: Mr. Abid Awan
30
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.
By: Elegance Group
To: Mr. Abid Awan
31
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.
By: Elegance Group
To: Mr. Abid Awan
32
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 I stands for Interest 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 Due Rs.18907.78 This amount of Rs.18907.78 is applied to reduction of principal. So
By: Elegance Group
To: Mr. Abid Awan
33
February 10, 2009
FINAL PROJECT OF BUSINESS MATH 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 I stands for Interest 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 + Rs.941.49 Rs.94055.93 principle owed Interest
The amount due on the maturity date of the note is Rs.94055.93.
By: Elegance Group
To: Mr. Abid Awan
34
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% 5 % 105% C Rs.1257.87 + M Rs.147.13 S Rs.1405
By: Elegance Group
To: Mr. Abid Awan
35
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 point This 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
By: Elegance Group
To: Mr. Abid Awan
36
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
By: Elegance Group
To: Mr. Abid Awan
37
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
By: Elegance Group
To: Mr. Abid Awan
38
February 10, 2009
Scenario 2
The Super deluxe Bracket fan has a profit function as follows in Uni trade Pvt. Ltd.
Profit Function
P = 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.
By: Elegance Group
To: Mr. Abid Awan
39
February 10, 2009
Scenario 3
The 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. Revenue = price x 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 = 1405x Now 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
By: Elegance Group
To: Mr. Abid Awan
40
February 10, 2009
By: Elegance Group
To: Mr. Abid Awan
41
February 10, 2009
Total production of the Bracket fans = 51 units So share of the Bracket fans in the total production = 45/100 * 100 => 45% Share of Deluxe in the total production of fans = 15/100*100 =>15%
By: Elegance Group
To: Mr. Abid Awan
42
February 10, 2009
Raw Materials:
Raw materials are the main source in finding the cost of the Deluxe Bracket Fan.
By: Elegance Group
To: Mr. Abid Awan
43
February 10, 2009 Table of Raw Materials Sr.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 Item Name Ball Bearing Base Screws Blade Blade Paint Bracket Fitting Capacitor 2.5uf Cotton tape, Petrol, sleeve and Paper etc Enamel copper Wire Five core Cable 24 inch Gear Greece Cup Gear Lever Gear Set Goli Spring Guard Guard Blade Packing Guard Mono Guard Ring Labor Field Light Metal Base Plate Misc. Items Name Printing Motor Body Motor Fitting Mounting Hook Naka Naka Clip Naka Goli (Steel Balls) & Spring Naka Nut & Bolt Naka Spring Packing Box (Base+Guard) Packing Stickers Plastic Base 300 Grm Plastic Dome Plastic Dome Plate Rotor & Stator MS Screws & Packing Shafting Show Cup Supply Cable Switch
Unit Pcs Pcs Pcs Pcs Pcs Pcs Pcs Grm Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Grm Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs 2 Pcs Set Pcs Pcs Pcs Pcs Pcs
Qty. 2 5 1 1 1 1 1 340 1 1 1 1 1 1 1 1 1 1 1 1 1 375 1 1 1 1 1 1 1 1 3 1 1 1 1 25 1 1 1 1
Unit Price Amount 15 30 0.3 1.5 115 115 10 10 12 12 8 8 8 0.35 12 1.75 3.5 60 1.5 120 3 10 24 15 20 25 2 0.145 12 9 56 6 0.5 3.75 5 45 1 61 40 12 8 119 12 1.75 3.5 60 1.5 120 3 10 24 15 20 25 2 54.375 12 9 56 6 0.5 3.75 5 45 3 61 40 12
By: Elegance Group
90 90 0.5 12.5 35 35 7 7 20 20 19 19 To: Mr. Abid Awan 44 1092.375
February 10, 2009
Machine
Type Of Machinery No. Of Machin es Depression Cost on annual basis 11250 14250 1 2 2250 Total Cost of Machines at time of Purchase 225,000 285,000 45000 32000
TURNING WINDING COMPRESSOR DRILLING
3 2
1600
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.29, 350. Total Depreciation per day 29350/365 = Rs.80.41 Total Cost of machines at the Time of purchase = Rs.5, 87,000 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% = 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
By: Elegance Group
To: Mr. Abid Awan
45
February 10, 2009
Labor:
Total Labor: 30 Departments No. of Labors in each Department Salary/Wages per Person Per day (in Rupees) 200 250 500 400 300 Cost Of labor Per Day (no. of labors multiple salary) 4000 750 1000 800 600 -
Production Department Production supervisor Sales Department Marketing Department Finance Department Management Department Fixed Cost:
20 3 2 2 2 1
Fixed Cost Elements in labor (production supervisor, sales department, sales department, marketing department, fianc department, quality department & management department) Total Fixed Cost of the Labors = Rs.7150 per day Total production capacity of the company = 100 units per day 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.600 Charges of the production department on the one Deluxe fan = 600/15 => Rs.40
By: Elegance Group
To: Mr. Abid Awan
46
February 10, 2009
Expenditures Cost Per month In Rupees Variable Cost: Total utility expenses per month= Rs.10, 500
Electricity Bills 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
By: Elegance Group
To: Mr. Abid Awan
47
February 10, 2009
Expenditures of the FOH:

Expenditures Cost Per month In Rupees Telephone Bills 5800 Other expenses 6000
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 Cost = Total Fixed Cost + Total Variable Cost 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
Total Variable Cost: 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
By: Elegance Group
To: Mr. Abid Awan
48
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 is basically the fixed per unit cost. Cost Function Total cost = Fixed Cost + variable cost C(x) = 1290.311 + 1135.875x
Revenue Function
Revenue = price x quantity 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
By: Elegance Group
To: Mr. Abid Awan
49
February 10, 2009
Quantity Demanded
Price Rs.1200 Rs.1250 Rs.1300 Quantity Demanded 350 Units 400 Units 450 Units Month April May June
Graph:
By: Elegance Group
To: Mr. Abid Awan
50
122500a + 50b = 50 4 Subtracting equation 3 by equation 2 We get 127500a + 50b = 50.5 Now subtracting equation 5 by equation 4 We get 5000a = 0 a=0 Putting value of a in equation 4 We get 50b = 50 b=1 Now putting the value of a an b in equation 1 1440000a + 1200b + c = 350 1440000(0) + 1200(1) + c = 350 c = 350 1200 c = -850 Qd = p 850
By: Elegance Group
To: Mr. Abid Awan
51
February 10, 2009
Quality Supplied
Price Rs.1200 Rs.1250 Rs.1300 Quantity supplied 280 Units 330 Units 390 Units Month April May June
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
By: Elegance Group
To: Mr. Abid Awan
52
122500a + 50b = 50 4 Subtracting equation 3 by equation 2 We get 127500a + 50b = 60.5 Now subtracting equation 5 by equation 4 We get 5000a = 10 a = 10/5000 a = 0.002 Putting value of a in equation 5 We get 127500a + 50b = 60 127500(0.002) + 50b = 60 255 + 50b = 60 50b = 60 225 50b = - 195 b = - 3.9 Now putting the value of a an b in equation 1 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
By: Elegance Group
To: Mr. Abid Awan 53
February 10, 2009
p 850 = 0.002p2 3.9p + 2080 0.002p2 3.9p + 2080 p + 850 = 0 0.002p2 4.9p + 2930 = 0
By: Elegance Group
To: Mr. Abid Awan
54
February 10, 2009
Quadratic Formula
P = - b + (b2 4ac) 2a = 4.9 + (24.01 23.44) 0.004 = 4.9 + (0.57) 0.004 = 4.9 + 0.75 0.004 P = Rs.1414
By: Elegance Group
To: Mr. Abid Awan
55
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 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
Price/Unit 1257.875 1026.1 1365.9 1257.875 1026.1
By: Elegance Group
To: Mr. Abid Awan
56
February 10, 2009
Total inventory remaining at the end of the month: 210 Units So April 30 April 10 109 fans at Rs.1026.1 = Rs.111844.9 101 fans at Rs.1257.875 = Rs.127045.375
111844.9 + 127045.375 = Rs.238890.275 The value of fans at the end of the end of the month is Rs.238890.275
By: Elegance Group
To: Mr. Abid Awan
57
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.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
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.153/Rs.1147 = 0.13 =13.3% 100% C Rs.1147 13.3 % + M Rs.153
By: Elegance Group
To: Mr. Abid Awan
58
February 10, 2009 113.3% S Rs.1300
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.1300. 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 Supreme it is Rs.1092.375. 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 point This is Break-even point = (cost + operating cost) = 1092.375+ (0.07 x 1092.375) = Rs.1168.84 The reduce price will be 1300 (1300 x 0.15) = 1300 195 = Rs.1105 So the operating loss is as follows
By: Elegance Group
To: Mr. Abid Awan
59
February 10, 2009 Break-even point reduced price = operating loss 1168.84 1105= Rs.63.84 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 1092.375 1105 = Rs.-12.625
By: Elegance Group
To: Mr. Abid Awan
60
February 10, 2009
Differentiation
Scenario 1
The Deluxe Bracket fan has a profit function as follows in Uni trade Pvt. Ltd.
Profit Function
Profit = Revenue Cost P = 164.125x 1132.811 The company reaches break even point when it sales 8 products in a day. What will be the average rate in change in the profit if the sale changes from 8 to 16 fans? So according to the formula
Average Rate of change = f (change in sale) f (previous sale) change in sale - previous sale 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 Average rate of change = Rs.164.125
By: Elegance Group
To: Mr. Abid Awan
61
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 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 = 164.125x 1132.811 Now we will take the first derivative of the profit function P. P = 164.125x 1132.811 P/ = 164.125 So the profit per unit sold is 164.125.
By: Elegance Group
To: Mr. Abid Awan
62
February 10, 2009
Scenario 3
The Super deluxe Bracket fan has a revenue function as follows in Uni trade Pvt. Ltd.
Revenue Function
Revenue Function
R = 1300x Now we will take the first derivative of the revenue function R = 1300x R/ = 1300 The revenue achieved on every unit is 1300. Now if 15 Super Deluxe fans are sold the revenue will be as follows X = 15 R(x) = 1300x = 1300(15) = Rs.19500
By: Elegance Group
To: Mr. Abid Awan
63
February 10, 2009
By: Elegance Group
To: Mr. Abid Awan
64
February 10, 2009
Total production of the Bracket fans = 51 units So share of the Bracket fans in the total production = 45/100 * 100 => 45% Share of Supreme in the total production of fans = 10/100*100 =>10%
By: Elegance Group
To: Mr. Abid Awan
65
February 10, 2009
Raw Materials:
Raw materials are the main source in finding the cost of the Supreme Bracket Fan.
By: Elegance Group
To: Mr. Abid Awan
66
February 10, 2009
Sr.No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43
Item Name Ball Bearing Base Screws Blade Blade Paint Bracket Fitting Capacitor 2.5uf Cotton tape, Petrol, sleeve and Paper etc Enamel copper Wire Five core Cable 24 inch Gear Greece Cup Gear Lever Gear Set Goli Spring Guard Guard Blade Packing Guard Mono Guard Ring Labor Field Light Metal Base Plate Misc. Items Name Printing Motor Body Motor Fitting mounting Hook Naka Naka Clip Naka Goli (Steel Balls) & Spring Naka Nut & Bolt Naka Spring Name Plate Packing Box (Base+Guard) Packing Stickers Plastic Base 300 Grm Plastic Dome Plastic Dome Plate Pulling Knob Rotor & Stator MS Screws & Packing Shafting Shoppers Show Cup Supply Cable Switch
Unit Pcs Pcs Pcs Pcs Pcs Pcs
Qty. 2 5 1 1 1 1 1 360 1 1 1 1 1 1 1 1 1 1 1 1 1 425 1 1 1 1 1 1 1 1 1 3 1 1 1 1
Unit Price Amount 35 70 0.3 1.5 125 125 25 25 12 12 25 25 8 0.45 12 1.75 4.5 75 1.5 150 3 11 25 15 20 36 2 0.175 12 9 60 10 0.5 3.75 5 6 70 1 65 40 15 4 8 162 12 1.75 4.5 75 1.5 150 3 11 25 15 20 36 2 74.375 12 9 60 10 0.5 3.75 5 6 70 3 65 40 15 4
Pcs Grm Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Grm Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs Pcs 2 Pcs Set Pcs Pcs Pcs By: Elegance Group Pcs Pcs Pcs
1 130 130 25 0.5 12.5 1 35 35 3 To: Mr.3Abid Awan9 67 1 7 7 1 20 20 1 19 19 1395.375
February 10, 2009
Machine
Type Of Machinery No. Of Machin es Depression Cost on annual basis 11250 14250 1 2 2250 Total Cost of Machines at time of Purchase 225,000 285,000 45000 32000
TURNING WINDING COMPRESSOR Drilling
3 2
1600
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.29, 350. Total Depreciation per day 29350/365 = Rs.80.41 Total Cost of machines at the Time of purchase = Rs.5, 87,000 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 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
By: Elegance Group
To: Mr. Abid Awan
68
February 10, 2009
Labor:
Total Labor: 30 Departments No. of Labors in each Department Salary/Wages per Person Per day (in Rupees) 200 250 500 400 300 Cost Of labor Per Day (no. of labors multiple salary) 4000 750 1000 800 600 -
Production Department Production supervisor Sales Department Marketing Department Finance Department Management Department Fixed Cost:
20 3 2 2 2 1
Fixed Cost Elements in labor (production supervisor, sales department, sales department, marketing department, fianc department, quality department & management department) Total Fixed Cost of the Labors = Rs.7150 per day Total production capacity of the company = 100 units per day 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.400 Charges of the production department on the one Supreme fan = 400/10 => Rs.40
By: Elegance Group
To: Mr. Abid Awan
69
February 10, 2009
Expenditures Cost Per month In Rupees Variable Cost: Total utility expenses per month= Rs.10,500
Electricity Bills 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 Expenditures of the FOH:
Expenditures Cost Per month In Rupees
Telephone Bills 5800
Other expenses 6000
Fixed Cost:
Total factory overhead per month (utility expenses) = Rs.11800 Factory 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 Total Cost = Total Fixed Cost + Total Variable Cost
By: Elegance Group
To: Mr. Abid Awan
70
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
Total Variable Cost: 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 Total cost = Fixed Cost + variable cost C(x) = 860.2 + 1438.875 x
By: Elegance Group
To: Mr. Abid Awan
71
February 10, 2009
Revenue Function
Revenue = price x quantity R(x) = 1575x Profit Function Profit = Revenue Cost = 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
By: Elegance Group
To: Mr. Abid Awan
72
February 10, 2009
Quantity Demanded
Price Rs.1475 Rs.1525 Rs.1575 Quantity Demanded 200 Units 250 Units 300 Units Month April May June
Graph:
By: Elegance Group
To: Mr. Abid Awan
73
February 10, 2009 (1475)2 a + (1475) b + c = 200 2175625a + 1475b + c = 200 1 (1525)2 a + (1525) b + c = 250 2325625a + 1525b + c = 250 .2 (1575)2 a + (1575) b + c = 300 2480625a + 1575b + c = 300 3
Subtracting equation 2 by equation 1 We get 1, 50,000a + 50b = 50 ..4 Subtracting equation 3 by equation 2 We get 155,000a + 50b = 50 5
By: Elegance Group
To: Mr. Abid Awan
74
February 10, 2009 Now subtracting equation 5 by equation 4 We get 5000a = 0 a=0 Putting value of a in equation 4 We get 50b = 50 b=1 Now putting the value of a an b in equation 1 2175625(0) + 1475(1) + c = 200 c = 200 1475 c = --1275 Qd = p - 1275
By: Elegance Group
To: Mr. Abid Awan
75
February 10, 2009
Quality Supplied
Price Rs.1475 Rs.1525 Rs.1575 Quantity supplied 150 Units 200 Units 260 Units Month April May June
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
By: Elegance Group
To: Mr. Abid Awan
76
February 10, 2009 Subtracting equation 2 by equation 1 We get 150,000a + 50b = 50 ..4 Subtracting equation 3 by equation 2 We get 155000a + 50b = 60 ...5 Now subtracting equation 5 by equation 4 We get 5000a = 10 a = 10/ 5000 a = 0.002 Putting value of a in equation 4 We get 150,000(0.002) + 50b = 50 310 + 50b = 60 50b = 60 310 50b = - 250 b = - 250/50 b=-5 Now putting the value of a an b in equation 1 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
By: Elegance Group
To: Mr. Abid Awan
77
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 + 0.64 0.004 P = 1660 Rupees
By: Elegance Group
To: Mr. Abid Awan
78
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 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
Price/Unit 1257.875 1026.1 1365.9 1257.875 1026.1
Total inventory remaining at the end of the month: 210 Units
By: Elegance Group
To: Mr. Abid Awan
79
February 10, 2009 So April 3 April 10 124 fans at Rs.1257.875 = Rs.155976.5 86 fans at Rs.1026.1 = Rs.88244.6
155976.5 + 88244.6 = Rs.244221.1 The value of fans at the end of the end of the month is Rs.244221.1
By: Elegance Group
To: Mr. Abid Awan
80
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.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
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.110.25/Rs.1464.75 = 0.075 =7.5% 100% C Rs.1464.75 7.5 % + M Rs.110.25
By: Elegance Group
To: Mr. Abid Awan
81
February 10, 2009 107.5% S Rs.1575
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 Supreme it is Rs.1395.375. 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 point This is Break-even point = (cost + operating cost) = 1395.375+ (0.07 x 1395.375) = Rs.1493.05 The reduce price will be 1575 (1575 x 0.15) = 1575 236.25 = Rs.1338.75 So the operating loss is as follows
By: Elegance Group
To: Mr. Abid Awan
82
February 10, 2009 Break-even point reduced price = operating loss 1493.05 1338.75= Rs.154.3 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 1395.375 1338.75= Rs.56.625
By: Elegance Group
To: Mr. Abid Awan
83
February 10, 2009
Scenario 1
The Supreme Bracket fan has a profit function as follows in Uni trade Pvt. Ltd.
Profit Function
Profit = Revenue Cost P = 136.125x 855.2 The company reaches break even point when it sales 7 products in a day. What will be the average rate in change in the profit if the sale changes from 7 to 20 fans? So according to the formula
Average Rate of change = f (change in sale) f (previous sale) change in sale - previous sale 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 Average rate of change = Rs.136.125
By: Elegance Group
To: Mr. Abid Awan
84
February 10, 2009
Scenario 2
The Supreme Bracket fan has a profit function as follows in Uni trade Pvt. Ltd.
Profit Function
P = 136.125x 855.2
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 = 136.125x 855.2
Now we will take the first derivative of the profit function P. P = 136.125x 855.2 P/ = 136.125 So the profit per unit sold is 136.125.
By: Elegance Group
To: Mr. Abid Awan
85
February 10, 2009
Scenario 3
The Supreme Bracket fan has a revenue function as follows in Uni trade Pvt. Ltd.
Revenue Function
Revenue Function
R(x) = 1575x Now we will take the first derivative of the revenue function R = 1575x R/ = 1575 The revenue achieved on every unit is 1575. Now if 15 Supreme fans are sold the revenue will be as follows X = 15 R(x) = 1575x = 1575(15) = Rs.23625
By: Elegance Group
To: Mr. Abid Awan
86
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.
By: Elegance Group
To: Mr. Abid Awan
87

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February 10, 2009

FINAL PROJECT OF BUSINESS MATH

Group Name- Elegance

By: Elegance Group

To: Mr. Abid Awan

February 10, 2009

FINAL PROJECT OF BUSINESS MATH

By: Elegance Group

To: Mr. Abid Awan

February 10, 2009

FINAL PROJECT OF BUSINESS MATH

February 10, 2009

FINAL PROJECT OF BUSINESS MATH

By: Elegance Group

To: Mr. Abid Awan

February 10, 2009

FINAL PROJECT OF BUSINESS MATH

By: Elegance Group

To: Mr. Abid Awan

February 10, 2009

FINAL PROJECT OF BUSINESS MATH

By: Elegance Group

To: Mr. Abid Awan

February 10, 2009

FINAL PROJECT OF BUSINESS MATH

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

By: Elegance Group

To: Mr. Abid Awan

February 10, 2009

FINAL PROJECT OF BUSINESS MATH

By: Elegance Group

To: Mr. Abid Awan

February 10, 2009

FINAL PROJECT OF BUSINESS MATH

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

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

By: Elegance Group

To: Mr. Abid Awan

February 10, 2009

FINAL PROJECT OF BUSINESS MATH

By: Elegance Group

To: Mr. Abid Awan

February 10, 2009

FINAL PROJECT OF BUSINESS MATH

TOTAL PRODUCTION ON DAILY BASIS

Qty. 2 5 1 1 1 1 1 345 1 1 1 1 1 1 1 1 1 1 1 1 1 425

By: Elegance Group

By: Elegance Group

To: Mr. Abid Awan

February 10, 2009