Break-Even Analysis: A Case Study of Petrol Sales

PR1: Oral Assessment and Presentation

Report 1:
A: Economic value added.
Economic value added is the incremental qualification in the charge of income for an
association's price of capital. In a general feel, it's far the regard comprised of saves location
property right into an enterprise. In case the financial regard included estimation winds up being
negative, this concludes an enterprise is pounding a motivation on the blessings location assets
into it. It is predominant to review most of the portions of this estimation to look which zones of
an enterprise can be changed as in step with making an upper level of economic value added. If
the total budgetary regard covered stays poor, the enterprise ought to be shut down.
Particulars Amounts
Revenue
Income from repairs 100,000
Income from computer and software 108,000
Total Revenue (A) 208,000
purchase cost of Goods
Spare parts 25000
Computer and software 72000
Total Purchase cost of Goods (B) 97000
Other costs
Wages and salaries 42000
Rent and rates of premises 11000
Interest paid on bank loan 3000
Leasing of office equipment 12000
Total Other costs (C) 68000
Economic Added Value A- (B+C) 43,000

B: How has the money received as income been used by the business.
The income gain by the comp soft limited is utilised to pay its fix costs like rent of office
premise, less and interest expenses. The company also spends its revenue to pay wages to
employees for their services in repair and other works. The company purchases spare parts of $
25000 which are required for maintenance and repair services. The company also purchase some
computer systems and software programs for the purpose of resale. The remaining part of
income is transferred to owner’s fund which can be used by management as per business needs.
C: Advise the directors of compsoft to utilise any surplus money.
Compsoft is engaged in the business of computer programing and repair services. It is a newly
established business and the surplus earned by the business should be used by management in
that way which will enhance the sustainable success of the business. The company can use its
surplus to improve its internal structure or can purchase inventory items which are required to
provide quality services by paying cash payments. On the basis of cash payment, they can
request for a cash discount which will save some cost for business and improve the inventory
asset.
D: Percentage calculation:
I. spare parts costs:
Cost of Spare parts = 25000
Income from repairs = 100000
Percentage = 25000/100000*100 = 25%
II. Software and computer supplies
Cost of supplies of Software and computer = 72000
Income from sales = 108000
Percentage = 72000/108000*100 = 66.66%
III. Reason for difference: