LAB 4
PBT Calculation
The PBT projection for the coming year can be calculated as shown below.
|
Particulars |
Amount |
|
Revenue |
|
|
Total Bottles Sold |
630,000 |
|
Price Per bottle ($) |
1.59 |
|
Sales Revenue ($) |
1,001,700 |
|
Variable Costs |
|
|
Labor ($) |
233,100 |
|
Raw Material ($) |
327,600 |
|
Bottle Hardware ($) |
88,200 |
|
Fixed Costs |
|
|
Fixed Production ($) |
75,000 |
|
General & Admin |
115,000 |
|
Advertising |
45,000 |
|
Interest |
41,000 |
|
Depreciation |
47,000 |
|
Total Costs ($) |
971,900 |
|
PBT |
29,800 |
Hence the expected PBT as shown above is $29,800.
ROS Calculation
ROS = (PBT/Sales) *100
For the coming year, expected sales = $1,001,700
Expected PBT = $29,800
Hence ROS = (29800/1001700)*100 = 2.975%
LAB 5
- Selling price of a bottle = $1.59
Total fixed cost = (75000+115000+45000+41000+47000) = $323,000
Variable cost per bottle = 0.37+0.52+0.14 = $1.03
Let us assume that the breakeven quantity of bottle be X
Total revenue generated = 1.59X
Total costs (Fixed + Variable) = 323000 + 1.03X
For breakeven, Revenue generated = Total costs
Hence 1.59X = 323000 + 1.03X
Which implies that X= 576,786 bottles
- PBT calculation at full capacity is as shown below.
|
Particulars |
Amount |
|
Revenue |
|
|
Total Bottles Sold |
650,000 |
|
Price Per bottle ($) |
1.59 |
|
Sales Revenue ($) |
1,033,500 |
|
Variable Costs |
|
|
Labor ($) |
240,500 |
|
Raw Material ($) |
338,000 |
|
Bottle Hardware ($) |
91,000 |
|
Fixed Costs |
|
|
Fixed Production ($) |
75,000 |
|
General & Admin |
115,000 |
|
Advertising |
45,000 |
|
Interest |
41,000 |
|
Depreciation |
47,000 |
|
Total Costs ($) |
992,500 |
|
PBT ($) |
41,000 |
Hence PBT = $41,000 and Sales = $1,033,500
Hence ROS = (41000/1033500)*100 = 3.967%
- Full production capacity = 650,000
Let the selling price per bottle be $X
Total revenue generated at this capacity = 650000X
Total fixed cost = $323,000
Total variable costs = 650000*1.03 = $669,500
Total costs = $992,500
PBT = 650000X – 992,500
Since ROS should be 11%
Hence (650000X – 992,500/ 650000X) = 0.11
Solving the above, we get X= $1.716
- Let the breakeven quantity be X bottles
Total revenues generated = 1.716X
Total fixed cost = (75000+115000+45000+41000+47000) = $323,000
Variable cost per bottle = 0.37+0.52+0.14 = $1.03
Total costs (Fixed + Variable) = 323000 + 1.03X
For breakeven, Revenue generated = Total costs
Hence 1.716X = 323000 + 1.03X
Which implies that X= 470,805 bottles
- Revenue at full production assuming price of $1.59 = $1,033,500
Total fixed cost = $323,000
Let the cost per bottle be $ X
Variable cost per bottle = X+0.52+0.14= 0.66+X
Total costs = 323,000 + (0.66+X)*650000
PBT = 1033500 – 323000 – [(0.66+X)*650000]
Since ROS is 11%, hence
(1033500 – 323000 – [(0.66+X)*650000])/1033500 = 0.11
Solving the above, we X = $0.2582
- 6. Assuming the production @630,000 bottles
Let the selling price per bottle be $X
Revenue generated = 630000X
Total Fixed costs = 323,000 + 60,000 = $383,000
New unit variable cost = 1.03- 0.15 = $0.88
Total variable costs = 0.88*63000 = $554,400
Total costs = 383000 + 554400 = $937,400
PBT = 630000X – 937400
Since ROS is 11%, hence
(630000X – 937400)/630000X = 0.11
Solving for X, we get X = $1.672
Assuming the production @650,000
Let the selling price per bottle be $X
Revenue generated = 650000X
Total Fixed costs = 323,000 + 60,000 = $383,000
New unit variable cost = 1.03 – 0.15 = $0.88
Total variable costs = 0.88*65000 = $572,000
Total costs = 383000 + 572,000 = $955,000
PBT = 650000X –955,000
Since ROS is 11%, hence
(650000X – 955,000)/650000X = 0.11
Solving for X, we get X = $1.651
