In this paper using CVP Analysis we have analyzed the product of Shinepukur Ceramics Limited to know whether the company is profitable or not by examining the interrelationships between its costs, revenues, production volume and profits. Also we determined the breakeven point or level of operating activity at which revenues covered the company’s all fixed and variable costs, resulting in zero profit. Knowing about this point is very crucial for the business, because it is the point a company wants to reach as quickly as possible in order to cover all the costs and start making real profits.
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Cost volume Profit Analysis of Shinepukur Ceramics Limited
1. Cost Volume Profit Analysis:
Prsented by :
Samia Ibrahim
Hamida Begum
Bijoya Bhowmik
Salva Wahida
Nasrin Sultana
“A Study Based on the Shinepukur
Ceramics Limited”
2. Introduction
Cost Volume Profit Analysis is the study of
the relationship between revenues, costs and
profits of a business.
Cost-volume-profit analysis is useful in the
early stages of planning.
3. Purpose of the Study
To identify and calculate the fixed and
variable costs.
To calculate contribution margin ratio,
breakeven point in taka and margin of
safety in taka.
To prepare break even chart of
Shinepukur Ceramics Limited.
4. Components of Fixed Cost
Manufacturing Overhead:
Gratuity
Office expenses
Insurance expenses
Occupancy expenses
Lease rental
Administrative Overhead:
Depreciation
Salaries and allowances
Gratuity
Welfare expenses
Office expenses
Legal fees, prof. and other
fees
AGM expenses
Occupancy expenses
Audit fee
Selling & Distribution
Expenses:
Promotional expenses
Salaries and allowances
Gratuity
Advertising
Occupancy expenses
Office expenses
Welfare expenses
Show room expenses
Legal and professional fees
Product research
Lease rental
18. Margin of safety in Taka
Years Total Margin of safety
2010 1,691,522,266
2011 1,625,933,302
2012 1,667,874,713
2013 1,446,656,856
2014 1,060,990,977
19. Margin of safety in Taka
0
200000000
400000000
600000000
800000000
1000000000
1200000000
1400000000
1600000000
1800000000
2010 2011 2012 2013 2014
Margin of
safety
20. Net Income
Years Total net income
2010 640,491,160
2011 568,982,965
2012 621,357,282
2013 573,819,171
2014 300,422,485
22. Break Even Chart Analysis
0.00
200,000,000.00
400,000,000.00
600,000,000.00
800,000,000.00
1,000,000,000.00
1,200,000,000.00
1,400,000,000.00
1,600,000,000.00
1,800,000,000.00
2,000,000,000.00
Revenue&cost
Units
Revenue
Fixed cost
Variable
cost
Total cost
Break even point
Variablecosts
Fixed Costs
Break Even Chart of
2010
Loss
23. Break Even Chart Analysis
0.00
200,000,000.00
400,000,000.00
600,000,000.00
800,000,000.00
1,000,000,000.00
1,200,000,000.00
1,400,000,000.00
1,600,000,000.00
1,800,000,000.00
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Revenue&cost
Units
Revenue
Fixed
cost
Variable
cost
Total
cost
Fixed Costs
VariableCosts
Break- Even Point
Break Even Chart of
2014
25. Conclusion
Shinepukur Ceramics Limited is profitable.
The profitability is decreasing every year.
Has to take necessary measures to avoid loss.
Performance can be improved by increasing
sales volume, increasing selling price,
decreasing variable and fixed costs.