Analyze and categorize various expenses into fixed cost, variable cost, and initial investment. Variable cost Cost per
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Analyze and categorize various expenses into fixed cost, variable cost, and initial investment.
| Variable cost | Cost per unit (cost per month/200,000) | Cost per month | Cost per year | Cost for 5 years | ||
| Fly ash | $1.25 | $250,000.00 | $3,000,000.00 | $15,000,000.00 | ||
| Gypsum | $1.25 | $250,000.00 | $3,000,000.00 | $15,000,000.00 | ||
| Lime | $1.50 | $300,000.00 | $3,600,000.00 | $18,000,000.00 | ||
| Sand | $0.20 | $40,000.00 | $480,000.00 | $2,400,000.00 | ||
| Electricity | $0.05 | $10,000.00 | $120,000.00 | $600,000.00 | ||
| Labour | $0.25 | $50,000.00 | $600,000.00 | $3,000,000.00 | ||
| Total | $4.50 | $900,000.00 | $10,800,000.00 | $54,000,000.00 | ||
| Monthly brick manufacturing of 200,000(2.4 Mil/12) | $200,000.00 | |||||
| Fixed cost | Monthly | yearly | 5 years |
| building | $50,000.00 | $600,000.00 | $3,000,000.00 |
| admin | $10,000.00 | $120,000.00 | $600,000.00 |
| office supply | $5,000.00 | $60,000.00 | $300,000.00 |
| electricity | $10,000.00 | $120,000.00 | $600,000.00 |
| misc | $20,000.00 | $240,000.00 | $1,200,000.00 |
| Total | $95,000.00 | $1,140,000.00 | $5,700,000.00 |
| Workers | $100,000.00 | $1,200,000.00 | $6,000,000.00 |
| Office assistant | $20,000.00 | $240,000.00 | $1,200,000.00 |
| Watchman | $15,000.00 | $180,000.00 | $900,000.00 |
| Drivers | $25,000.00 | $300,000.00 | $1,500,000.00 |
| Sharma's salary | $50,000.00 | $600,000.00 | $3,000,000.00 |
| Total | $210,000.00 | $2,520,000.00 | $12,600,000.00 |
| Fixed Cost | $305,000.00 | $3,660,000.00 | $18,300,000.00 |
| Loan (4Mil /12*12%) | $40,000.00 | $480,000.00 | $2,400,000.00 |
| Depreciation expense | $133,333.33 | $1,600,000.00 | $8,000,000.00 |
| Total Fixed cost | $478,333.33 | $5,740,000.00 | $20,700,000.00 |
| Cost of Initial Investment | |
| Fixed Assets | |
| Building Modifocation | $1,400,000.00 |
| Water spply arrangements | $100,000.00 |
| Machinery | $2,000,000.00 |
| Trucks | $3,000,000.00 |
| Payload machine | $1,500,000.00 |
| working capital | 2000000 |
| Total | $10,000,000.00 |
| Investment | |
| Investment from partners | $6,000,000.00 |
| Loan from Bank at 12% | $4,000,000.00 |
| Total | $10,000,000.00 |
Question 2 Find the breakeven point and plot a CVP graph
| Break-Even Analysis | |||
| monthly | yearly | 5 years | |
| Unit variable cost | $4.50 | $4.50 | $4.50 |
| unit selling price | $7.00 | $7.00 | $7.00 |
| total fixed cost | $478,333.33 | $5,740,000.00 | $20,700,000.00 |
| Contribution margin | $2.50 | $2.50 | $2.50 |
| BEP | $191,333.33 | $2,296,000.00 | $8,280,000.00 |
Question 3 How many bricks need to be sold to earn a targeted income of Rs. 2 million per year?
Target Income
Fixed expense + target profit/CM per unit
=5,740,000.00+2,000,000/2.5
=3,096,000.00
To earn a targeted income of Rs. 2 million per year, 3096000 bricks need to be sold.
Question 4 How do volumes affect the return on equity?
Question 5 What advice can be given to the owners?
Expert Answer:
Lets categorize the expenses into fixed cost variable cost and initial investment Variable Costs Fly ... View the full answer
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