Business Analytics: Costing and Revenue Behaviour Analysis, Mathematical Modelling, Correlation Coefficient, Break Even Analysis

Business Analytic

Table of Contents
INTRODUCTION...........................................................................................................................3
Question 1........................................................................................................................................3
Develop a mathematical tool......................................................................................................3
(b) Find out the profit of the organisation...................................................................................4
d) Analyse the cost behaviour.....................................................................................................5
Question 2........................................................................................................................................6
(a) Calculate the correlation coefficient of the advertisement/sales. Provide interpretation for
the following...............................................................................................................................6
b) Plot a scatter diagram of the data provided and patter of the relationship between the two
variable........................................................................................................................................7
(c) Evaluate the impact of advertising expenditure on sales. And other marketing strategies.. .8
Question 3........................................................................................................................................9
(a) Determine the breakeven point of the number unit sold and margin of safety......................9
(b) Break even chart..................................................................................................................11
(c) Calculate the sales volume in order to achieve the desired profit 560000..........................11
(d)Advantage and disadvantage of breakeven analysis............................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Business analytics is a practice which emphasizes on taking a business data of the past and
performing analysis on it. The analysis provides trends, patterns and causes that happen to occur.
This helps the organisation to make a data driven choices which is really helpful for making
dynamic decisions (Awan and et al., 2021). In this report three question need to be attempted, the
question involves costing and revenue behaviour analysis, understanding mathematical model
and budget making. Statistical tool is used for understanding the relationship between
advertisement expenditure and sales. Break even analysis and calculation of margin of safety and
its usage in an organisation. Question nuymber1, 2 and 3rd is attempted.
Question 1
Develop a mathematical tool
Total cost
118000
18000
Fixed Cost
100,000
Variable cost
18000
Unit variable
cost
0.90
Quantity
produced
200000

A mathematical model is an effective tool used by the cost accounted to figure out the
profit gained by the company. It provides the data for costing components like variable, fixed
and overhead cost used in the production of product. It is practised on spreadsheet for performing
other functions that is used for forecasting, situation analysis such as “what if” this used for
understanding the effect of cost on sales and other elements. This type of modelling is really
important for determining the cost effect changes when deviations ion the other elements are
taken (Balakumar and Mohan, 2019).
π = pq – (Fn + wq)
here, in the above equation, p is the selling price, f is the fixed cost, w represents the variable per
unit sold, q is quantity sold.
Profit= Sales – total cost
Budgeted annual output 2,00,000
Fixed cost amount 1,00,000
Variable cost 0.9
Sales price 3
(b) Find out the profit of the organisation
In marginal costing profit is calculated by deducting the variable and fixed cost from the sales
price per unit. It helps in optimum utilisation of resources through economies of scale. The
marginal revue should match the marginal revenue (Cao and et al., 2021).
Calculation of the profit
Particular Total unit Per unit price Amount
Budgeted annual output 200000 3 600000
variable cost 200000 0.9 180000
Contribution 420000
Fixed cost 1,00,000
Profit 3,20,000
(c)
Five year projection
Particular Rate of increase 2023 2024 2025 2026 2027
Budgeted annual output 10% 220000 242000 266200 292820 322102
Sales price(Per unit) 5% 3.15 3.3075 3.472875 3.64651875 3.8288447
variable cost (Per unit) 10% 0.99 1.089 1.1979 1.31769 1.449459
Contribution(Per unit) 2.16 2.2185 2.274975 2.32882875 2.3793857