Business Analytics: Mathematical Model, Costing and Revenue Behaviour, Correlation Coefficient, and Marketing Tactics

BUSINESS ANALYTICS

Table of Contents
INTRODUCTION...........................................................................................................................3
QUESTION 1..................................................................................................................................3
(a) Creation of Mathematical model using the given cost information.......................................3
(b) Calculation of profit or loss of DC Ltd. using the given information....................................3
(c) Developing graph of five-year projection from January 2023...............................................4
(d) Critical analysis and comment on costing and revenue behaviour in both general as well as
DC Ltd context............................................................................................................................5
QUESTION 2..................................................................................................................................7
(a) Calculation of correlation coefficient between advertising and sales of Nice Wear Ltd.......7
(b) Scattered diagram of the data and comment on the relationship between two variables.......8
(c) Critical analysis of impact of advertising expenditure on sales and recommendation of
relevant marketing tactics............................................................................................................8
QUESTION 3................................................................................................................................10
(a) Calculation of Break-even point and margin of safety percentage of 640 computer software
sales............................................................................................................................................10
(b) Calculation of sales volume that Basu Plc need to sale to achieve target profit for the year
of £56000...................................................................................................................................11
(c) Preparation of Break-even chart for Basu Plc properly showing Break-even point and
margin of safety.........................................................................................................................12
(d) Critical analysis of benefits and limitations of the break-even model.................................13
CONCLUSION..............................................................................................................................14
REFERENCES................................................................................................................................1

INTRODUCTION
Business analytics is basically a set of disciplines and also technologies with the help of
which the companies can analyse their data for solving the business problem and making
appropriate decision-making (Cazenave and et.al., 2018). The present report will firstly develop
the mathematic model using the cost information provided by the Joycelyn’s influence diagram.
Further, the report will compute the profit and loss of DC Ltd using the same information and
prepare the five-year projection. The report will also discuss the costing and revenue behaviour
in general as well as DC Ltd context. Further, the report will compute the correlation coefficient
between advertising expenditure and sales revenue for Nice Wear Ltd. In addition, the report will
analyse the impact of advertising expenditure on sales and describe the relevant marketing tactic
that marketing manager of Nice Wear company can adopt in order to enhance the competitive
performance in designer clothing industry. Lastly, the report will compute the break-even point
of Basu Plc, create the chart and critically analyse the benefits and limitation of break-even
model.
QUESTION 1
(a) Creation of Mathematical model using the given cost information
Total Cost = Fixed Cost + Variable Cost
= £110000 + £490000
= £600000
Variable Cost = Unit variable cost * Quantity produced
= £0.70 * 700000
= £490000
(b) Calculation of profit or loss of DC Ltd. using the given information
It is assumed that all the units produced by the organization such as DC ltd are sold in the
market.
Profit and Loss A/c
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 110000
Net Profit 1850000
(c) Developing graph of five-year projection from January 2023
Unit
variable
cost
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%)
Unit
sales
price
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%)
Sales
unit
770000
(700000 *
110%)
847000
(770000 *
110%)
931700
(847000 *
110%)
1024870
(931700 *
110%)
1127357
(1024870 *
110%)
Particulars Jan-23 Jan-24 Jan-25 Jan-26 Jan-27
Sales
Revenue
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)
Contribution 2209900 2491366 2808337 3165236 3567028
Less Fixed
cost 110000 110000 110000 110000 110000
Net Profit 2099900 2381366 2698337 3055236 3457028