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  • Financial Management (MBA 511E) Assignment # 1: Nowsheen Noor ID # 1921251

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    This document contains an assignment submission for an MBA course on financial management. It includes: 1) A break even analysis calculating that the break even point is 1000 units sold at a fixed cost of BDT 6,000,000, variable cost of BDT 4,000 per tube, and selling price of BDT 10,000 per tube. 2) A calculation that a 10% increase over the break even point of 1000 units is BDT 1,100,000. 3) A calculation that with a new variable cost of BDT 3,600 per tube, the new break even point is 93 units for BDT 930,000. 4) An analysis of whether a company

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    This document contains an assignment submission for an MBA course on financial management. It includes: 1) A break even analysis calculating that the break even point is 1000 units sold at a fixed cost of BDT 6,000,000, variable cost of BDT 4,000 per tube, and selling price of BDT 10,000 per tube. 2) A calculation that a 10% increase over the break even point of 1000 units is BDT 1,100,000. 3) A calculation that with a new variable cost of BDT 3,600 per tube, the new break even point is 93 units for BDT 930,000. 4) An analysis of whether a company

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    32 views3 pages

    Financial Management (MBA 511E) Assignment # 1: Nowsheen Noor ID # 1921251

    Uploaded by

    Nowsheen Noor
    This document contains an assignment submission for an MBA course on financial management. It includes: 1) A break even analysis calculating that the break even point is 1000 units sold at a fixed cost of BDT 6,000,000, variable cost of BDT 4,000 per tube, and selling price of BDT 10,000 per tube. 2) A calculation that a 10% increase over the break even point of 1000 units is BDT 1,100,000. 3) A calculation that with a new variable cost of BDT 3,600 per tube, the new break even point is 93 units for BDT 930,000. 4) An analysis of whether a company

    Copyright:

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    of 3

    Financial Management

    (MBA 511E)

    Assignment # 1

    Submitted by:
    Nowsheen Noor
    ID # 1921251

    Submitted to:
    Dr. Chowdhury Saleh Ahmed
    a) Break Even Analysis
    A break-even analysis is a financial tool which helps you to determine at what stage your
    company, or a new service or a product, will be profitable. In other words, it’s a financial
    calculation for determining the number of
    products or services a company should
    sell to cover its costs (particularly fixed
    costs). Break-even is a situation where
    you are neither making money nor losing
    money, but all your costs have been
    covered.
    Break-even analysis is useful in studying
    the relation between the variable cost,
    fixed cost and revenue. Generally, a
    company with low fixed costs will have a
    low break-even point of sale.

    b)
    Fixed Cost = BDT 6000000
    Variable Cost = 4000 per tube
    Selling Price = 10000 per tube
    BEP (Qty) = Fixed Cost/(Price-Variable Cost)
    = 6000000/(10000-4000)
    = 1000 units (Ans)

    c)
    BEP (Qty) = 1000 units
    So,
    BEP (BDT) = 1000x10000
    = BDT 100000
    So,
    10% over BEP= 100000+110%
    =BDT 110000 (Ans)
    d)
    Given,
    New VC per tube = 4000-90%
    = 3600
    New BEP (Qty) = Fixed Cost/(Price-Variable Cost)
    = 600000/(10000-3600)
    = 93 units
    BEP (BDT) = 93x10000
    = BDT 930000 (Ans)

    e) If the company buys and sells at break-even point, then the company will neither make any
    profit, nor any loss.

    f) If a seller is running at a market where other sellers cannot influence the price ruling in the
    market, then it can be of less risk even if the price is kept higher. That way, the company will
    be able to make more profit. So, the company should not sell at break-even price.

    g)
    BEP (in BDT) = 2,000
    Ruling price = 3,000
    Factory capacity = 8,000
    BEP (output) = 3,000
    Total market demand =33,000

    Yes, the company will be able to sell all his output at the market price.

    The company can start making profit after exceeding the BEP output, which is 3000 units,
    because any production after BEP output will be profit for the company.

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