Business Maths and Statistics | Assignment

Running head: BUSINESS MATHS AND STATISTICS 1
BUSINESS MATHS AND STATISTICS

Running head: BUSINESS MATHS AND STATISTICS
Table of Contents
PART A...........................................................................................................................................3
A).................................................................................................................................................3
B), C), D).....................................................................................................................................3
E)..................................................................................................................................................3
3)..................................................................................................................................................3
4)..................................................................................................................................................4
Part B...............................................................................................................................................5
1)..................................................................................................................................................5
2)..................................................................................................................................................5
3)..................................................................................................................................................5
4)..................................................................................................................................................6
a)...............................................................................................................................................6
c)...............................................................................................................................................6
d)...............................................................................................................................................6
5)..................................................................................................................................................7
6)..................................................................................................................................................7
References........................................................................................................................................9

Running head: BUSINESS MATHS AND STATISTICS
PART A
A)
Sales Commission 114,750.00 124,200.00 142,290.00
B), C), D)
Calculation of
depreciation
Cos
t
Residua
l value
Ye
ars
Methods of
depreciation
Depreciat
ion rate
Depreciatio
n amount
Net
Book
value
Factory
Equipment
775
000 25000 8 SLM 66406.25
708593.
75
Computers
650
00 0 4
DIMINISHIN
G 25% 16250 48750
Office fit out
750
00 0 8 SLM 9375 65625
E)
Calculation of interest Amount
Initial value of loan 300000
Interest rate 4.50%
Monthly installments 12.00%
Years 4
Monthly compound interest 1615.29
3)
Projected Profit and Loss
Scenario 1 Scenario 2 Scenario 3
Unit Calculations
Cost of Goods (per unit) 375 450 540
Mark up 70% 60% 55%
Sales Price (GST Excl) 637.50 720.00 837.00
GST 37.50 45.00 54.00
Sales Price (GST incl) 675.00 765.00 891.00
Number of Units 3,600 3,450 3,400
Revenue 2,430,000.00 2,639,250.00 3,029,400.00
Less: Cost of Goods Sold 1,350,000.00 1,552,500.00 1,836,000.00

Running head: BUSINESS MATHS AND STATISTICS
GROSS PROFIT 1,080,000.00 1,086,750.00 1,193,400.00
Expenses
Sales - Wages 80,000.00 80,000.00 80,000.00
Commission 114,750.00 124,200.00 142,290.00
Administrative wages 190,000.00 190,000.00 190,000.00
Depreciation - Factory Equipment 66,406.25 66,406.25 66,406.25
Depreciation - Computers 16,250.00 16,250.00 16,250.00
Depreciation - Office fit out 9,375.00 9,375.00 9,375.00
Other operating costs 72,600.00 72,600.00 72,600.00
Rent 158,400.00 158,400.00 158,400.00
Interest 1,615.29 1,615.29 1,615.29
TOTAL EXPENSES 709,396.54 718,846.54 736,936.54
NET PROFIT 370,603.46 367,903.46 456,463.46
Company Tax Rate 30.0% 30.0% 30.0%
Company Tax Payable 111,181.04 110,371.04 136,939.04
4)
Tax payable for each employee 1,800.00 1,725.00 1,700.00
Selling price 675.00 765.00 891.00
Revenue 1,215,000.00 1,319,625.00 1,514,700.00
Less: Cost of goods sold 675,000.00 776,250.00 918,000.00
Gross Profit 540,000.00 543,375.00 596,700.00
Less: expenses 114,750.00 124,200.00 142,290.00
Less: Wages 80,000.00 80,000.00 80,000.00
Profit 345,250.00 339,175.00 374,410.00
Company tax payable 127,742.50 125,494.75 138,531.70
(ATO, 2019).

Running head: BUSINESS MATHS AND STATISTICS
Part B
1)
Profit plays a vital role while choosing the best alternative and hence, if the profit is highest it
determines that the company is able to pay to its investors and the shareholders. The scenario
that shall be selected is the Scenario C as the net profit is the highest and thereafter the profit
after giving the tax component is also highest at $319524.42. Despite having the same rate of tax
at 30%, the highest tax is paid under Scenario C and at the same time, the highest profit is also
acquired under scenario C.
2)
The major variance that can be observed between the scenarios, are in terms of the commission
as there is a difference in the number of sales units. As per the table it can be seen that in
Scenario 1, the sales have been made for only 3600 units, whereas in scenario B, the sales have
been made were 3450 units and 3400 units in Scenario C respectively. Further the sales price
inclusive GST has also been higher than the above two at $891 per product (Robinson, et al
2015).
3)
The straight line method of the depreciation is a method under which the fixed asset is
depreciated over the useful life of an asset after deducting the salvage value, whereas in case of
the diminishing method, the depreciation is calculating on the book value which arrives after
deducting the depreciation. The same can be found in the case study on account of example,
where factory equipment’s depreciation is calculated on SLM basis and the depreciation on
computer is calculated on diminishing vale method.

Running head: BUSINESS MATHS AND STATISTICS
4)
a)
Breakeven analysis
Fixed costs 514,646.54 1,466.23
Contribution per unit 351.00 units
c)
Break even analysis is an analysis that displays a situation where there is no profit and no loss in
terms of units and also in dollars. In current scenarios, the breakeven unit are 1466 units which
implies that the company has to make this much units in order to avoid any losses. It is one of the
important financial techniques as it helps to analyze the position of the company with respect to
the revenues and the expenses (Robinson, et al 2015).
d)
Break-even analysis is an important aspect of a good business plan, since it helps the business
determine the cost structures, and the number of units that need to be sold in order to cover the
cost or make a profit (Schroeder, Clark and Cathey, 2019).

Running head: BUSINESS MATHS AND STATISTICS
5)
Expenses
Sales - Wages Commission
Administratve wages Depreciation - Factory
Equipment
Depreciation - Computers Depreciation - Office fit out
Other operating costs Rent
Interest
Pie chart is a chart that is a graphical representation of the data, in the form of the circle along
with the degrees. The pie chart above displays the expenses that have been incurred in all the
three scenarios. As it can be observed from the above the major share is grabbed by the
administrative wages and the commission given to the sales person (Robinson, et al 2015).
6)
From the overall analysis it can be recommended that Scenario 3, is the feasible scenario form
the point of view of the future growth, potentiality and the economic conditions. In today’s time
the net profit margin and gross profit margin plays a vital role and hence, it can be seen that
though the overall net profit margin is highest for Scenario 1, but in reality in terms of the figures
the same is for Scenario 3.
Particulars Scenario 1 Scenario 2 Scenario 3
Net profit margin 10.68% 9.76% 10.55%
Gross profit margin 44.44% 41.18% 39.39%

Running head: BUSINESS MATHS AND STATISTICS
The gross margins are favorable for Scenario 1 and Scenario 2, hence in the basis of the overall
performance, Scenario 3 tends to be more feasible from the aspects of both the net profit as well
as gross profit of the business, which might be lower than Scenario 1, but still is preferred over it
due to the selling price (Goldmann, 2017).

Running head: BUSINESS MATHS AND STATISTICS
References
ATO, (2019). Individual income tax rates [online]Available from
https://www.ato.gov.au/rates/individual-income-tax-rates/?=top_10_rates#Residents [Accessed
on 5th April 2020].
Goldmann, K., (2017) Financial liquidity and profitability management in practice of polish
business. In Financial Environment and Business Development (pp. 103-112). Springer, Cham.
Robinson, T.R., Henry, E., Pirie, W.L. and Broihahn, M.A., (2015) International financial
statement analysis. John Wiley & Sons.
Schroeder, R.G., Clark, M.W. and Cathey, J.M., (2019) Financial accounting theory and
analysis: text and cases. John Wiley & Sons.