1. 1 Teaching Innovation - Entrepreneurial - Global The Centre for Technology enabled Teaching & Learning, N Y S S, India DTEL DTEL (Department for Technology Enhanced Learning)

2. UNIT 2:- SYLLABUSDTEL. Factors of production, Production function, 1 Firm and Industry 2 Law of return 3 Cost concepts, 4 2 Fixed, variable, Average, Marginal and Total cost, 5 Break even analysis 6 Depreciation and methods for depreciation. 7

3. UNIT-2 SPECIFIC OBJECTIVE / COURSE OUTCOMEDTEL To understand function,factors and laws related to the production. 1 3 The student will be able to: To understand different varieties of cost related to production. 2 To gain the knowledge related to depreciation and their methods. 3

4. LECTURE 9:- PRODUCTIONDTEL Meaning Of Production 4 4 Production in economics generally refers to the transformation of inputs into outputs. In technical terms, production means the creation of utility or creation of want-satisfying goods and services.

5. LECTURE 9:- PRODUCTIONDTEL Factors Of Production 5 5 LandLabourCapitalOrganization

6. LECTURE 9:- PRODUCTIONDTEL Factors Of Production 6 6

7. LECTURE 10:- PRODUCTIONDTEL Production Function 7 7 Production function is defined as the functional relationship between physical inputs and physical outputs. Production function can be expressed as follows : Q = f (a, b, c, d…)

8. LECTURE 10:- PRODUCTIONDTEL Production Function 8 8 InputsProcessOutput Land Labour Capital Product or service generated – value added Organization

9. LECTURE 11:- PRODUCTIONDTEL The Law Of Returns 9 9 The change in percentage output resulting from a percentage change in all the factors of production. Increasing ReturnsConstant ReturnsDiminishing Return

10. LECTURE 11:- PRODUCTIONDTEL The Law Of Returns 10 Sr. No.Scale Total Product Marginal Product StageReturns 11 Acre Land + 3 Labour55 Stage- IIncreasing 22 Acre Land + 5 Labour127 33 Acre Land + 7 Labour219 44 Acre Land + 9 Labour3211 Stage- IIConstant 55 Acre Land + 11 Labour4311 66 Acre Land + 12 Labour5411 77 Acre Land + 13 Labour628 Stage- III Diminishing 88 Acre Land + 14 Labour675

11. LECTURE 11:- PRODUCTIONDTEL The Law Of Returns 11 Marginal Product Factors of Unit Employed Stage - I Stage - II Stage - III

12. LECTURE 12:- PRODUCTIONDTEL Cost Concept 12 The expenses incurred on all inputs of production– both factor inputs and non-factor inputs are known as the cost of production. Real Cost The cost of producing a good or service, including the cost of all resources used and the cost of not employing those resources in alternative uses. Nominal cost is the money cost (expenses) of production incurred on various inputs of production.

13. LECTURE 12:- PRODUCTIONDTEL Types Of Cost 13 Fixed cost Variable Cost Total Cost Total Fixed cost Total Variable Cost Average Cost Average Variable Cost

14. LECTURE 13:- PRODUCTIONDTEL Total Cost Curves 14

15. LECTURE 13:- PRODUCTIONDTEL Average Cost Curves 15

16. LECTURE 14:- PRODUCTIONDTEL Breakeven Analysis 16 Breakeven Analysis Defined.. ………………………… Breakeven analysis examines the short run relationship between changes in volume and changes in total sales revenue, expenses and net profit Also known as C-V-P analysis (Cost Volume Profit Analysis)

17. LECTURE 14:- PRODUCTIONDTEL Breakeven Analysis 17 Key Terminology: Breakeven Analysis.. Margin of safety-a measure in which the budgeted volume of sales is compared with the volume of sales required to break even Marginal Cost – cost of producing one extra unit of output ………………………… Break even point-the point at which a company makes neither a profit or a loss. Contribution per unit-the sales price minus the variable cost per unit. It measures the contribution made by each item of output to the fixed costs and profit of the organisation.

18. LECTURE 14:- PRODUCTIONDTEL Breakeven Analysis 18 Breakeven Chart

19. LECTURE 14:- PRODUCTIONDTEL Breakeven Analysis 19 Limitations of B/E analysis Costs are either fixed or variable Fixed and variable costs are clearly discernable over the whole range of output Production = Sales One product/constant sales mix Selling price remains constant Efficiency remains unchanged Volume is the only factor affecting costs

20. LECTURE 15:- PRODUCTIONDTEL Depreciation 20 The permanent and continuing diminution in the quality, quantity or value of an asset”. The fall in value or utility of fixed assets due to so many causes like :- 1.Wear And Tear, 2.Decay 3.Obsolescence, 4.Breakdown, 5.Fall In Market Value

21. LECTURE 16:- PRODUCTIONDTEL Methods of Depreciation 21 Straight Line Method Written Down Value Method Annuity Method Sinking Fund Method Revaluation or Appraisal Method Insurance Policy Method Depletion Method

22. LECTURE :- PRODUCTIONDTEL 22 THANK YOU