Business Analytic

BUSINESS ANALYTIC

TABLE OF CONTENTS
TABLE OF CONTENTS................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
QUESTION- 1.................................................................................................................................1
a) Mathematical model for cost...................................................................................................1
b) Calculation of the profit or loss for CF ltd..............................................................................1
c) Five-year projection plan for the business...............................................................................1
d) Analysis of the costing and revenue behaviour.......................................................................1
QUESTION- 2.................................................................................................................................1
a) Calculation of correlation coefficient of advertising and sales...............................................1
b) Scatter diagram and the pattern of relationship of the two variables......................................1
c) Impact of the advertising expenditure on sales and advice regarding how the company can
gain competitive advantage by using the marketing tactics........................................................1
QUESTION- 3.................................................................................................................................1
a) Calculation of the break-even point and margin of safety for the different options in the
company.......................................................................................................................................2
b) Reasons for adopting a particular plan for the Mansleep plc..................................................5
c) Factors that needs to be considered before committing to a particular course of action.........5
d) Benefits and limitations of the break-even model...................................................................6
Application of the break-even model in marginal costing and the formulation of the business
strategy.........................................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Business analytic is the process using which the companies shall be applying the
statistical tools on the historical data that is available in order to generate the deeper insights
regarding the same. Further this analysis regarding the various important factors and their
interrelationship shall be helpful in generating the meaningful decisions for the company. It shall
be assisting in providing the strategic direction to the company and accordingly shall be defining
the competencies in the market. The current project shall be dealing with the similar business
problems and data analysis in order to define the relationship of the different variables in the
business and which shall be contributing to the success of the organization. The mathematical
models shall be defined, the statistical techniques like the correlation shall be incorporated and
apart from that the break-even model to analyse the interrelationship among the different variants
of the business. This can further lead to the strategical planning and decision making in the entity
to support its future obligations and fulfil the required business objectives.
MAIN BODY
QUESTION- 1
a) Mathematical model for cost
Particulars Amount
Annual output 200000
Fixed cost 80000
Variable cost (per unit) 0.65
Sales price (per unit) 3
The mathematical model shall be showing the function that is being followed in the
business which shall be leading to the calculations that can be made at the various levels of the
sales that are being executed in the company. The model that is being used in the above scenario
is Sales – Variable cost – Fixed cost= Profits. The costs in the company can be divided into two
parts one is the variable cost which remains constant per unit and the fixed cost remains constant
in the company in totality. So with the help of this function any value in the equation can be
found out.
1

b) Calculation of the profit or loss for CF Ltd
Particulars Amount (in £)
Sales 600000
Less: Variable cost 130000
Less: Fixed cost 80000
Profit or loss 390000
From the above table it can be indicated that the business is capable of making the profits
of up-to 390000 with the sales level of 600000. This means that by selling the 200000 units in 3
per unit selling price and the variable cost of 0.65 per unit, the company is able to attain this
level in the business.
c) Five-year projection plan for the business
2021 2022 2023 2024 2025 2026
Annual output 200000 220000 242000 266200 292820
32210
2
Variable cost (per
unit) 0.65 0.69 0.73 0.77 0.82 0.87
Sales price (per
unit) 3 3.15 3.31 3.47 3.65 3.83
Particulars 2022 2023 2024 2025 2026
Sales 693000 800415 924479 1067774 1233279
Less: Variable cost 151580 176742 206081 240291 280179
Less: Fixed cost 80000 80000 80000 80000 80000
Profit or loss 461420 543673 638398 747483 873099
The future projections have been made in the company for the five years that are from
2022 to 2026 as per the given conditions of the increase and the decrease in the percentages of
revenues, costs and the profits of the company. This future projections that are made by the
2