Muhammed Samsuzzaman E mail: Senior Teacher Kakoli High School School E mail: Web address:

S u b j e c t : B u s i n e s s E n t e r p r e u n e r s h i p

Let’s watch the picture

What is your evaluation? One is laughing by making profit

Today’s Lesson Profit Planning Analysis

Learning Outcomes 1.Speak about profit/loss 2.Understand about BEP 3.Clear concept about Fixed & Variable costs. 4.To know about profitable business or margin of safety.

If a seller sold a product at Tk. 50 If its cost is Tk. 40 Find out profit? Tk. 10 Rough and Solution

Profit = Sales price – Cost price Oppositely Loss = Cost – sales

Cost 1. Fixed cost 2. Variable cost Rent Insurance SalaryLabor 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 = - 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.

,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) / 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. 10 After showing this, please click here to return Back to Main slide Profit