A BRIEF GUIDELINE TO CASE ANALYSIS 2

Fly Ash Brick Project

Dear all,

Further to my previous postings of study materials, I welcome you all to your CASE ANALYSIS 2.

Please note that you are to answer the following questions in your Case 2. You are requested to follow the sequences of the questions.

Activity/Competencies Demonstrated	% of Grade	% of Final Grade
Identification, Analysis of Issues, Recommendation (100%)
a. Analyze various expenses	/20
b. Breakeven point	/20
c. Target Income	/25
d. ROE	/25
e. Recommendation	/10
Total	/100

PLEASE WORK ON YOUR CASE ANALYSIS 2 AS PER THE FOLLOWING GUIDELINES

1. Analysis of various expenses:

(Variable and Fixed)

a) Please calculate total Variable Expenses (find per unit variable cost).

b) Calculate Total Yearly Fixed Expenses (please be careful while calculating Fixed Expenses. If your Fixed expenses are not calculated correctly, the Break-Even-Point will not be correct)

2. Break-Even-Point:

Based on the above analysis using the BEP (You already studied the chapter CVP Analysis) formula please calculate Break-Even-Point.

Please draw a CVP Chart and show the BEP point in that chart

DRAW A BEP CHART

GIVE A BRIEF DESCRIPTION OF THE CHART WHICH SHOULD INCLUDE THE FOLLOWING.

A) TOTAL AMOUNT OF FIXED COSTS IN COSTS LINE

B) TOTAL VARIABLE COSTS IN COST LINE

C) THE POINT WHERE THE VARIABLE COSTS INTERSECTS FIXED COSTS

D) THE INDICATION OF THE BEP POINT

IMPORTANT NOTE:

IF YOU DO NOT EXPLAIN THE CVP GRAPH YOU WILL NOT GET THE FULL MARKS IN THIS SECTION OF THE ANSWER

3. Target Income:

In this section, please apply the formula (Target Income studied in CVP analysis chapter) to find units to be produced to attain a targeted income of 2 million

(How many bricks need to be sold to earn a targeted income of Rs 2 million per year?)

4. Return on Investment (ROE)

NOTE:

PLEASE GO THROUGH DISCUSSION PROBLEM CHAPTER

REPORT FOR CONTROL

WHICH I POSTED TODAY. YOU WILL FIND SOME PRPBEMS DISCUSSING RETURN ON INVESTMENT (ROE)

In this section, please calculate Operating Profit on Different Stimulated Volume. Please find the ROE in %. In the different volume of sales. For Example, you may calculate profit on THREE different volume like

Sales in ooo' brick 2400 3200 4000

Capacity utilization

60% 80% 100%

Please calculate revenue as per the price given in your question (Rs 7,000 per 000 bricks). Similarly, calculate variable cost (Rs 4,500 per 000 brick).

Then find out the contribution margin and profit under each volume of sales.

Finally, calculate the ROE of equity which is mentioned in the case.

5. Concluding remarks:

Based on the above analysis advise the owner of the company and give your concluding remarks.

Please do not hesitate to ask any questions you have regarding the case analysis.

Wish you all the best in resolving your Case Analysis 2.

Please take care and be safe.

Prof

ATTACHMENT:

PLEASE FIND ATTACHED HEREWITH THE CASE 2 QUESTION

A-CASE-2-QUESTION.pdf