Business Analytics: Mathematical Model, Cost and Revenue Behaviour, Correlation Coefficient and Advertising Impact on Sales

BUSINESS ANALYTICS

Table of Contents
INTRODUCTION...........................................................................................................................3
QUESTION 1..................................................................................................................................3
a) Developing the mathematical model by using the cost information given.............................3
b) Calculating the profit and loss of DC Ltd. By using the information provided......................3
c) Drawing the graph of five-year projection that is from January 2023....................................4
d) Critically analysing and commenting on the cost and revenue behaviour in DC ltd and in
general context as well.................................................................................................................5
QUESTION 2..................................................................................................................................8
(a) Calculation of correlation of coefficient between advertising and sales factors of Nice
Wear Ltd......................................................................................................................................8
(B) Scattered diagram for the data and comments on the existing relationship between the
variables-......................................................................................................................................9
(C) Critical analysis of the impacts' advertisement brings on sales and giving
recommendations of the prevailing market tactics-...................................................................10
QUESTION 3................................................................................................................................11
a) calculating the Break Even Point and MOS of computer software sales..............................11
b) Calculating the sales volume of the company in order to achieve the profit for the current
year £56000...............................................................................................................................12
c) Preparing the Break even chart for the company by showing the BEP and Margin of safety
...................................................................................................................................................13
d) Critically analysing the benefits and limitations of the break even model...........................13
Benefits of BEP-.......................................................................................................................13
CONCLUSION..............................................................................................................................15
REFERENCES................................................................................................................................1

INTRODUCTION
Business analytics is known as set of disciplines and technologies for solving business
issues using data analysis, initiative methods and statistical models. It basically involves
methodical data of organization which is calculated through tactical analysis and helps in driving
decision making of the company. Along with this, business analytics is foundational process
which determine the goals for analysis and use information of business in order to develop
appropriate plan for company. In the present report discussion on Mathematica model will be
done in order to gather cost information as well as correlation and coefficient is calculated.
Along with this, scatter diagram will be made in order to show relation between two variables.
In addition to this, breakeven point in terms of number of programs and analysis the benefits and
limitation of breakdown model.
QUESTION 1
a) Developing the mathematical model by using the cost information given
Total Cost = Fixed Cost + Variable Cost
= £110000 + £490000
= £600000
Variable Cost = Unit variable cost * Quantity produced
= £0.70 * 700000
= £490000
b) Calculating the profit and loss of DC Ltd. By using the information provided
In order to solve this it is assumed that the unit produced by the cited company has been
sold in the market.
Profit and Loss A/c of DC Ltd.
Particulars Details Amount
Sales Revenue 700000 units * £3.50 per unit 2450000
(Less) Variable cost 700000 units * 0.70 per unit 490000
Contribution 1960000
(Less) Fixed cost of company 110000

Net Profit of the company 1850000
c) Drawing the graph of five-year projection that is from January 2023
Variable
cost
units
0.74
(0.70 × 105%)
0.77
(0.74 ×
105%)
0.81
(0.77 × 105%)
0.85
(0.81 ×
105%)
0.89
(0.85 × 105%)
Sales
price
units
3.61
(3.50 × 103%)
3.71
(3.61×103%)
3.82
(3.71 × 103%)
3.94
(3.82 ×
103%)
4.06
(3.94 × 103%)
Unit of
sales
770000
(700000 ×
110%)
847000
(770000 ×
110%)
931700
(847000 ×
110%)
1024870
(931700 ×
110%)
1127357
(1024870 ×
110%)
Particulars January- 23 January- 24 January- 25 January- 26 January- 27
Sales
Revenue of
DC Ltd.
2775850
(770000 ×
3.61)
3145038
(847000 ×
3.71)
3563328
(931700 × 3.82)
4037251
(1024870 ×
3.94)
4574205
(1127357 ×
4.06)
Less-
Variable
cost
565950
(770000 ×
0.74)
653672
(847000 ×
0.77)
754991
(931700 × 0.81)
872015
(1024870 ×
0.85)
1007177
(1127357 ×
0.89)
Contributio
n 2209900 2491366 2808337 3165236 3567028
Less- Fixed
cost 110000 110000 110000 110000 110000
Net Profit 2099900 2381366 2698337 3055236 3457028