Subject: Management Accounting-Decision Making FLY ASH BRICK PROJECT: FEASIBILITY STUDY USING CVP ANALYSIS

Assignment Questions Use the case study of Fly Ash Bricks Business Plan which was discussed in the class for Written Analysis of the case (WAC). For your WAC you would cover the following points. 1. Keeping all points of analysis in requirement 2 and 3 write a comprehensive report regarding your recommendations as an analyst. The report should accompany the calculations and other qualitative factors mentioned in requirement 2 as annexures to the report. The report should address the following points by using the above calculations as logical points in your report. a. what advice can be given to the owners? b. Is the proposed project viable? c. Would you recommend the partners to proceed in business? 2. Synopsis of the case mentioning the background and the problem to be solved mentioned in the case. 3. Brief Qualitative and Quantitative Analysis of the case. The analysis of the case may address the following questions. a. Industry analysis comprising of qualitative factors which are relevant in making decision of the business opportunity. b. How Breakeven Analysis can be used to evaluate the decision. You need to calculate the breakeven point in units and sales dollars by using equation method or formula method. c. Find the breakeven point by using a CVP graph method. d. How many bricks they would they need to sell for target annual profit of Rs 2.5 million. Prepare the contribution Income statement at this level of sales. How this target sales analysis impacts your decision. e. What is the degree of operating leverage of the company at this level of sales? How this impact on profit sensitivity? What would be the change in profit if there is a 20% change in sales. f. If the Electricity Cost is also volume based, then how DOL is affected with this change. How would it affect the profit sensitivity of the company? g. What is the margin of safety of the company in terms of $, units and percentage at the level of profit of Rs 2.5 million? How would you use this figure in your decision? h. How does volume affect return on Investment (ROI) and Return on Equity (ROE) at 60%, 80% and 100% capacity utilization? Prepare tabular income statements at these levels support your point of view. 3 . Good Luck. Assignment Questions Use the case study of Fly Ash Bricks Business Plan which was discussed in the class for Written Analysis of the case (WAC). For your WAC you would cover the following points. 1. Keeping all points of analysis in requirement 2 and 3 write a comprehensive report regarding your recommendations as an analyst. The report should accompany the calculations and other qualitative factors mentioned in requirement 2 as annexures to the report. The report should address the following points by using the above calculations as logical points in your report. a. what advice can be given to the owners? b. Is the proposed project viable? c. Would you recommend the partners to proceed in business? 2. Synopsis of the case mentioning the background and the problem to be solved mentioned in the case. 3. Brief Qualitative and Quantitative Analysis of the case. The analysis of the case may address the following questions. a. Industry analysis comprising of qualitative factors which are relevant in making decision of the business opportunity. b. How Breakeven Analysis can be used to evaluate the decision. You need to calculate the breakeven point in units and sales dollars by using equation method or formula method. c. Find the breakeven point by using a CVP graph method. d. How many bricks they would they need to sell for target annual profit of Rs 2.5 million. Prepare the contribution Income statement at this level of sales. How this target sales analysis impacts your decision. e. What is the degree of operating leverage of the company at this level of sales? How this impact on profit sensitivity? What would be the change in profit if there is a 20% change in sales. f. If the Electricity Cost is also volume based, then how DOL is affected with this change. How would it affect the profit sensitivity of the company? g. What is the margin of safety of the company in terms of $, units and percentage at the level of profit of Rs 2.5 million? How would you use this figure in your decision? h. How does volume affect return on Investment (ROI) and Return on Equity (ROE) at 60%, 80% and 100% capacity utilization? Prepare tabular income statements at these levels support your point of view. 3 . Good Luck