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    Dave Brothers

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    Sangtani Paresh
    1. The document analyzes the costs of starting a photocopying business, including machine costs, paper, supplies, salaries, rent, and electricity. It calculates variable and fixed costs per page. 2. Break-even analyses are presented for different price points per page. The break-even quantity, sales, and number of pages per day are reported. 3. The document recommends targeting a daily page volume of around 200 pages to achieve the desired monthly profit of 30,000 rupees.

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    Dave Brothers

    Uploaded by

    Sangtani Paresh
    58 views6 pages
    1. The document analyzes the costs of starting a photocopying business, including machine costs, paper, supplies, salaries, rent, and electricity. It calculates variable and fixed costs per page. 2. Break-even analyses are presented for different price points per page. The break-even quantity, sales, and number of pages per day are reported. 3. The document recommends targeting a daily page volume of around 200 pages to achieve the desired monthly profit of 30,000 rupees.

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    1. The document analyzes the costs of starting a photocopying business, including machine costs, paper, supplies, salaries, rent, and electricity. It calculates variable and fixed costs per page. 2. Break-even analyses are presented for different price points per page. The break-even quantity, sales, and number of pages per day are reported. 3. The document recommends targeting a daily page volume of around 200 pages to achieve the desired monthly profit of 30,000 rupees.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    58 views6 pages

    Dave Brothers

    Uploaded by

    Sangtani Paresh
    1. The document analyzes the costs of starting a photocopying business, including machine costs, paper, supplies, salaries, rent, and electricity. It calculates variable and fixed costs per page. 2. Break-even analyses are presented for different price points per page. The break-even quantity, sales, and number of pages per day are reported. 3. The document recommends targeting a daily page volume of around 200 pages to achieve the desired monthly profit of 30,000 rupees.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 6

    Whether to plunge into the photocopying business or not.

    Which machine to buy


    Gather information about the costs: cost of machine, cost of paper, cost of supplies, cost of manpower, etc.
    Classifyhing the costs
    Analyse this information for decision making
    How should we price our service?
    Retail customers: Rs.1 or 75 paise per page
    Corporate customers provide bulk orders: How much price to be charged
    Do we need to make any profit at all or not?
    Financing: approach the bank or the cousin or request parents or tap into past savings
    ost of manpower, etc.
    S No Cost item Cost cost p.a/p.u F/V
    1 Machine cost 35000 7000 per annum Fixed
    2 Interest exp @ 10% pa 3500 per annum Fixed
    3 Drum and film 2800 1400 per annum ? Fixed
    4 Shop rent 1,200 per annum Fixed
    5 Shop electricity bill 250 3,000 per annum Fixed
    6 Repairs & maintenance 1,000 per annum F(budgeted
    7 Toner useful for 25000 pgs 800 0.032 per page Variable
    8 Paper cost 0.2 per page Variable
    9 Direct power 0.04 per single side Variable
    10 Salary foregone 2500 pm 30,000 per annum Opportunity cost Fixed

    Variable cost per unit 0.272


    Fixed cost per annum 12,900

    1.00 0.75 0.50


    Sales revenue 1.00 0.75 0.50
    Variable cost 0.272 0.272 0.272
    Contribution margin 0.73 0.48 0.23
    Fixed cost 12,900 12,900 12,900
    Break even quantity FC/CMU 17,720 26,987 56,579
    Contribution margin percentagCM/sale pr 0.728 0.6373333 0.456
    Break even sales FC/CMP ₹ 17,720 ₹ 20,241 ₹ 28,289
    Profit target opprt. Cost 30,000 30,000 30,000
    Target profit No. of pages FC/CMU 58,929 89,749 188,158
    Sales revenue to attain target pFC/CMP ₹ 58,929 ₹ 67,312 ₹ 94,079
    Summary
    BEP no. of pages per day 59 90 189
    Target profit No. of pages per day 196 299 627

    Customer mix Price Qty VC p.u. con p.u Total cont


    Retail customers ₹ 1.00 9000 0.272 ₹ 0.73 ₹ 6,552
    Corporate customers ₹ 0.75 76,042 0.272 ₹ 0.48 ₹ 36,348
    85,042 42,900 283.47
    Economics of buying the new machine
    1 Machine cost 50000 5000 per annum
    2 Interest exp @ 10% pa 5000 per annum
    3 Drum and film 2800 1400 per annum
    4 Shop rent 1,200 per annum
    5 Shop electricity bill 250 3,000 per annum
    6 Repairs & maintenance 0 per annum
    7 Toner useful for 25000 pgs 800 0.025 per page
    8 Paper cost 0.2 per page
    9 Direct power 0.04 per single side
    10 Salary foregone 2500 pm 30,000 per annum
    Variable cost per unit 0.265
    Fixed cost per annum 11,400

    1.00 0.75 0.50


    Sales revenue 1.00 0.75 0.50
    Variable cost 0.265 0.265 0.265
    Contribution margin 0.74 0.49 0.24
    Fixed cost 11,400 11,400 11,400
    Break even quantity FC/CMU 15,510 23,505 48,511
    Contribution margin percentagCM/sale pr 0.735 0.6466667 0.47
    Break even sales FC/CMP ₹ 15,510 ₹ 17,629 ₹ 24,255
    Profit target opprt. Cost 30,000 30,000 30,000
    Break even quantity FC/CMU 56,327 85,361 176,170
    Break even sales in rupees FC/CMP ₹ 56,327 ₹ 64,021 ₹ 88,085
    Summary
    BEP no. of pages per day 52 78 162 59
    Target profit No. of pages per day 188 285 587 196

    Why should double-side printing be encouraged?

    What are the intangible benefits of living in Umreth?

    We have analyzed a lot! What should Ravinder do now?


    D/I R / sunk Cost Acc Fin acc
    Direct Relevant yes yes
    Indirect Relevant yes yes
    Direct Relevant yes if incurred
    Indirect Not relevant yes yes
    Indirect Not relevant yes yes
    Direct Relevant yes if incurred
    Direct Relevant yes yes
    Direct Relevant yes yes
    Direct Relevant yes yes
    Indirect Relevant yes if incurred

    1.00 0.75 0.50


    Target Sales Qty 58,929 89,749 188,158
    Sales Revenue ₹ 58,929 ₹ 67,312 ₹ 94,079
    Total variable cost ₹ 16,029 ₹ 24,412 ₹ 51,179
    Total contribution ₹ 42,900 ₹ 42,900 ₹ 42,900
    Total fixed cost ₹ 12,900 ₹ 12,900 ₹ 12,900
    Profit ₹ 30,000 ₹ 30,000 ₹ 30,000

    0.11
    90 189
    299 627

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