ECO602 Assignment No 1 Solution Autumn 2021-vu-Forecasting and Budgeting
ECO602 Assignment No 1 Solution Autumn 2021-vu-Forecasting and Budgeting
Sabroso is the favorite chicken brand in Pakistan. This brand has been working successfully for many years. It has outlets in various cities and is speedily expanding its business all over the Pakistan. No compromise on quality is the secret of its success. It provides variety of ready to cook and fully cooked chicken products. Suppose you have assigned the task to perform break-even analysis for this brand to analyze its performance. The hypothetical data required for analysis is given below. Total fixed cost incurred by this brand in production period= 10,00,000
Variable cost per unit = Rs. 500
Sale price per unit = Rs. 1000
Tax rate on income 20%
Requirements:
I.
Calculate the break-even level of output (units) required to get the desired/target
income (without tax) of Rs. 250,000 by using the above given data.
II.
Calculate the break-even quantity of output required to get desirable after-tax
income of Rs. 400,000 by using the given data.
III.
If value of actual sales is Rs. 26, 90,000 and the amount of break-even sales is Rs. 25,00,000, then find the value of margin of safety for this brand (only use the information is given in part III for calculation of margin of safety).
Sabroso is the favorite chicken brand in Pakistan. This brand has been working successfully for many years. It has outlets in various cities and is speedily expanding its business all over the Pakistan. No compromise on quality is the secret of its success. It provides variety of ready to cook and fully cooked chicken products. Suppose you have assigned the task to perform break-even analysis for this brand to analyze its performance. The hypothetical data required for analysis is given below. Total fixed cost incurred by this brand in production period= 10,00,000
Variable cost per unit = Rs. 500
Sale price per unit = Rs. 1000
Tax rate on income 20%
Requirements:
I.
Calculate the break-even level of output (units) required to get the desired/target
income (without tax) of Rs. 250,000 by using the above given data.
II.
Calculate the break-even quantity of output required to get desirable after-tax
income of Rs. 400,000 by using the given data.
III.
If value of actual sales is Rs. 26, 90,000 and the amount of break-even sales is Rs. 25,00,000, then find the value of margin of safety for this brand (only use the information is given in part III for calculation of margin of safety).
Transcript
00:00bismillah hir rahman ir raheem
00:02assalam o alaikum dear students and viewers
00:04welcome to my youtube channel dj learner points
00:06in today's video tutorial
00:08we will solve
00:10ECO 60102
00:12we will solve
00:14ECO 60102
00:16and
00:18related
00:20scenarios
00:22we will study
00:24related requirements
00:26we will move
00:28forward
00:30we will read out
00:32the statement
00:34then we will move
00:36forward
00:38the favorite chicken brand
00:40in pakistan
00:42this brand has been
00:44working successfully
00:46for many years
00:52it has outlets in various cities
00:54especially expanding
00:56its business
00:58all over the pakistan
01:12no compromise on quality
01:14is the secret of its success
01:22it provides variety of
01:24ready to cook and fully cooked
01:26chicken products
01:38suppose you have
01:40assigned the task to
01:42perform break-even analysis
01:44for this brand
01:46to analyze its performance
01:54the hypothetical data
01:56required for analysis
01:58is given below
02:10current total fixed cost
02:12incurred by this brand
02:14in production period
02:16is equal to 10,000
02:24fixed cost
02:26incurred by this brand
02:28is equal to 1,000,000
02:32variable cost per unit
02:34500
02:36price per unit
02:381000
02:40tax rate on income
02:4220%
02:4420%
02:46requirements
02:52Calculate the break-even
02:54level of output
02:56required to get the desired
02:58target income without tax
03:00of Rs. 250,000
03:02by using the above given data
03:08break-even level of output
03:10determine
03:12the desired income
03:14of Rs. 250,000
03:16without tax
03:30Calculate the break-even
03:32quantity of output
03:36required to get
03:38desirable after tax income
03:40of Rs. 250,000
03:42by using the given data
03:44Calculate the break-even
03:46level of output
03:48required to get
03:50desirable after tax income
03:52of Rs. 250,000
03:54without tax
03:56of Rs. 250,000
03:58by using the above given data
04:14Calculate the break-even
04:16level of output
04:18required to get
04:20desirable after tax income
04:22of Rs. 250,000
04:24without tax
04:26of Rs. 250,000
04:28without tax
04:30of Rs. 250,000
04:32without tax
04:34of Rs. 250,000
04:36without tax
04:38of Rs. 250,000
04:40without tax
04:42determinerite
04:44desired after tax
04:46income
04:48of Rs. 250,000
04:50without tax
04:52of Rs. 250,000
04:54without tax
04:56of Rs. 250,000
04:58without tax
05:00of Rs. 250,000
05:02without tax
05:04have interest
05:06have interest
05:08have interest
05:10We are determining output level in BEE units
05:15Fixed Cost plus Target Income divided by Contribution Margin per Unit
05:19This is the formula
05:21What we did
05:23Fixed cost was 1 million plus
05:26Target Income was 250,000
05:31Contribution Margin is
05:33Sales Price per Unit minus Variable Cost per Unit
05:371000 minus 5
05:39We got
05:411.2 million
05:43or you can say
05:4512,50,000 divided by 500
05:47The output level we got
05:49To achieve this income
05:54Without Tax
05:56You have to produce 2500 units
06:00You have to achieve this output level
06:03Part 2
06:05After Tax is same as I told you before
06:08After Tax
06:10Desired Amount
06:12Increased
06:14400,000
06:16I request you
06:18If I make any mistake
06:20In calculation or
06:22You can ask me in the
06:24Comment Section
06:26If you want to contribute
06:28If there is any error or mistake
06:30You are most welcome
06:32So that everyone can benefit
06:34Discussion corrects things
06:37Fixed Cost plus Target Income
06:39Contribution Margin per Unit
06:41This time fixed cost is same
06:43But Desired Income increased
06:45250,000 to 400,000
06:47So
06:49Contribution Margin will be same
06:51500
06:53What is the difference
06:55When Income increased
06:57The output level also increased
07:01To achieve this
07:03We have to produce 2800 units
07:05We have to produce
07:07But also have to sell
07:09Break even
07:11Analysis
07:13Ended
07:15Desired Income
07:17Part 3
07:19Margin of Safety
07:21Value
07:23Determines
07:25Expected or Actual Sales
07:27Minus Break Even Sales
07:29Expected or Actual Sales
07:31We had
07:3326,90,000
07:35and 25,00,000
07:37We had both
07:39What is the Margin of Safety
07:41190,000
07:43Here
07:45I will write
07:47Address
07:49caring247
07:51at
07:53email.com
07:55Here
07:57If someone
07:59Want to become Online Tuition
08:01Accounting
08:03You can contact me
08:05Here
08:07I will share my
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08:11If you like the video
08:13Like
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08:17Thanks for watching
08:19Assalam-o-Alaikum