Management

BUSINESS REPORT

For every organization expenses are inevitable in to produce the articles /things . The expenses may be fixed or variable . The fixed costs remain unchanged for sometime . The examples for fixed costs are rent insurance , equipment least etc . But whereas the variable expenses depends upon the level of activity such as raw materials , wages inventory , and office supplies etc . The variable expenses will be occurred only when the activity is in force . It is not like in case fixed expenses . Whether the organization conducted the activity or not it is

supposed to pay the fixed expenses

If we take the example of Bycle Company and if it has company produces 10 bikes then the fixed cost per bike will be 100 . And the variable cost of 200 is happened then 2000 will be variable cost So that cost of which amounts 3000 for 10 bikes . For profit measurement , the all expenses should be counted . But for contribution purpose , the fixed expenses should not be taken . For knowing and knowing the breakeven fixed and variable expenses are to be determined

In the given problem , the fixed expenses are given . However here the contribution should be identified . The variable expenses are 400 ,000 per day and wages 40 ,00 ,000 (50 ,000 x 80 , which amounts 44 ,00 ,000 only . The output of the company is 50 ,00 ,000 (200 ,000 x 25 price . So the Output (200 ,000 UNITSS 25 50 ,00 ,000

Variable expenses - wages (50 ,000x80 40 ,00 ,000

Other expenses 400 ,000

------------- 44 ,00 ,000 44 ,00 ,000

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Available surplus 600 ,000 (PER DAY

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Here it is indicated , that out of the business 600 ,000 per day is available after meeting the variable expenses . It should be noted even this project is not accepted , still the fixed expenses supposed to be paid by the organization . If this project is accepted , at least 600 ,000 can be paid per day towards fixed expenses , which will lessen the burden

Hence the said proposal should be accepted and it is not a loss . It should continue the operation and should not shut down

REFERENCE

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