2. Punjab fan is involved in the
production of fans, as a small
manufacturing unit of electric
fans. The organization purchases
material(Different Parts) and after
process produce fans. Its
products are now of local
standard and is trying to improve
for international standard.
3. QUALITY ASSURANCE:
In order to make our products unique,
prime quality electrical steel sheet, pure
Aluminum and 99. 99% best copper wire
and long life capacitors are used in motors
for better performance.
Cost Of Production:
The production cost is divided into two
parts.
4. a)Fixed Cost:
These are costs that are the
same regardless of how many items you
sell, such as rent, mortgage, insurance.
The fixed cost of the business for a period
is Rs.300,000.
b)Variable Cost:
Those that vary in relation to the
amount you sell or produce such as raw
materials, sales commissions, labour that
is dependent on the amount
manufactured.
The variable cost per unit is Rs.1400.00
5. Selling Price:
We can't calculate likely revenues if
we don't know what the unit price will
be. Unit price refers to the amount you
plan to charge customers to buy a
single unit of your product.
The selling price of a fan is Rs.2400.
Production:
The maximum production in a period
is 600 Fans . And the received orders
in two periods can be completed
6. Break-Even Point:
At the break-even point, no profit has
been made, nor have any losses been
incurred.
“A point where cost and revenue are
equal known as break-even point “
Only after you cross the break-even point
will the business start to make a profit.
Total Revenue = Total cost
7. Break-Even Point
NO. of fans (X)
= Fixed Cost/(Selling price per unit –variable cost Per unit)
=300000/(2400-1400)
=300 units
In monetary terms:
=No. of units * selling price per unit
= 300*2400
=Rs. 7,20,000
10. Order of 210 Fans by Hasan:
Details Amount
(Rs)
Sales (210*2400) 504,000
Less: V.cost
(210*1400) 294,000
Contribution 210,000
Less: Fixed Cost 300,000
Loss 90,000
11. Order of 500 Fans by Ali:
Details Amount
(Rs)
Sales (500*2400) 1200,000
Less: V. cost
(500*1400) 700,000
Contribution 500,000
Less: Fixed Cost 300,000
Profit 200,000
12. Management Function
Markup Policy:
To improve profit without increasing
investment is the company's markup policy.
Markup is the amount above cost that the
business charges for an item. It is often
discovered that a lover markup will produce a
higher volume of sales and increased profits.
Quality Management:
Customer expectations drive free scale
Quality management programs and
processes to help ensure satisfaction in
every aspect of our relationship.
13. Cont.
Pricing and Discounting
It is decided that the prices of the fans would be
settled at the point on which the costumer can
purchase the product easily. Discounts would also
be offered to the wholesalers in order to increase
the volume of sale.
Customer Service and Returned Goods
Handling:
Goods may be returned by customers either
because of their low quality or simply because the
customers do not need the products they received.
Guarantees.
Warrantees.
14. Cont.
Marketing management :
Marketing is the key point, by using
which we can increase our sales by
implementing 4p’s in our marketing
strategy which are…
1. Product
2. Price
3. Place
4. Promotion
