Analysis of Expenditure, Project Management and Break-Even Analysis

This report includes tasks related to expenditure analysis, project management, and break-even analysis. It covers topics such as mean, standard deviation, cross-sectional data, critical path, correlation matrix, regression equation, variable cost, fixed cost, break-even point, and margin of safety.

Coursework 1

Contents
PART 1...................................................................................................................................................4
TASK 1....................................................................................................................................................4
(a) Find the sum and variance in excel sheet.....................................................................................4
(b) Interpretation and analysis of mean and standard deviation.......................................................4
TASK 2....................................................................................................................................................4
(a) Construction of the three tables in excel and paste it here by calculating the value given..........4
(b) Why there is a difference in the mean and standard deviation of grouped and ungrouped data
and which one is more accurate?......................................................................................................5
(c) Give a comment on the minimum amount of the consumer needs estimated to spend on the
top 25% of the expenditure...............................................................................................................6
TASK 3....................................................................................................................................................6
Give the difference between the cross – sectional data and time series data with reference to the
examples considering the demographic profile and lifestyle nature of the consumers....................6
TASK 4....................................................................................................................................................7
(a) Draw a network diagram which shows the movement of forwards and backward passes..........7
(b) Identify the critical path and duration of the project...................................................................8
(c) Distinguish between critical and non – critical activities..............................................................9
TASK 5....................................................................................................................................................9
(a) Construct a correlation matrix and calculate the coefficients between quarterly sales and total
cost and average order value and gross profit..................................................................................9
(b) Identify the best predictor of the quarterly sales, explain the reason.........................................9
(c) Draw a scatter graph and show a trend line of the regression equation....................................10
(d) Interpret the coefficient of correlation and determination........................................................10
(e) State the equation of regression and interpret the value of intercepts.....................................10
TASK 6..................................................................................................................................................11
1. Calculate the coefficients of variation for business A and B........................................................11
2. By assuming that the risk of retailer is negative, which project should be chosen?....................11
TASK 7..................................................................................................................................................11
Give a reflective learning through the project.................................................................................11
PART 2.................................................................................................................................................11
1. Estimate the variable cost through high – low method...............................................................11
2. Calculate the monthly fixed cost.................................................................................................12
3. Calculate break even of January 2021.........................................................................................12
4. How many t-shirts should be sold to achieve the target profit in January 2021..........................12
5. Calculate margin of safety...........................................................................................................12

6. Interpret the above calculations..................................................................................................12
REFERENCES........................................................................................................................................13

PART 1
TASK 1
(a) Find the sum and variance in excel sheet.
Expenditure (£) on Stand Mixers
Mean 224.00
Standard Error 6.58
Median 224.00
Mode 224.00
Standard Deviation 75.00
Sample Variance 5625.00
Kurtosis -0.49
Skewness -0.32
Range 301.00
Minimum 68.00
Maximum 369.00
Sum 29120.00
Count 130.00
Coefficient of Variation 33.5%
(b) Interpretation and analysis of mean and standard deviation.
From the data it has been interpreted that, the mean is obtained as 224 and standard
deviation is obtained as 75. It means that there is a significant difference between the both
factors. Therefore, it is disclosing that the data point which are used, are very far from the
value of the mean.
TASK 2
(a) Construction of the three tables in excel and paste it here by calculating the value given.
Table 1
Expenditure (£) Frequency
Frequency
(%)
Under 100 14 11%
100 and under 200 35 27%
200 and under 300 65 50%

300 and over 16 12%
Total: 130 100%
Table 2
Expenditure (£) Frequency
Cumulative
Frequency Cumulative Frequency (%)
Under 100 14 14 11%
Under 200 35 49 38%
Under 300 65 114 88%
Under 400 16 130 100%
Total: 130
Table 3
Expenditure (£)
Frequency
(f)
midpoint
(x) fx (x-mean) (x-mean)2 f(x-mean)2
Under 100 14 49.5 693 -163.8461538 26845.56213 375837.8698
100 and under 200 35 149.5 5232.5 -63.84615385 4076.331361 142671.5976
200 and under 300 65 249.5 16217.5 36.15384615 1307.100592 84961.53846
300 and over 16 349.5 5592 136.1538462 18537.86982 296605.9172
Total: 130 27735 -55.38461538 50766.86391 900076.9231
Mean 213.3461538
Variance 390.5143377
Standard Deviation 19.76143562
(b) Why there is a difference in the mean and standard deviation of grouped and ungrouped
data and which one is more accurate?
The grouped data mean and standard deviation is approximately stating at 214 and 20. While
on the other hand, the standard deviation and mean of ungrouped data is 224 and 75. As it can be seen
that there is a considerably major difference in the values of the both the terms. This happens because
the ungroup data is the raw data and the function and calculated on the basis of raw data itself. But, in
the case of grouped data, it is simply divided into group and the functions are performed. Therefore,
the grouped data 1 is considered as more accurate.

(c) Give a comment on the minimum amount of the consumer needs estimated to spend on
the top 25% of the expenditure.
The minimum needs of the consumer of the top 25% of the people expenditure is
approximately around 250.
TASK 3
Give the difference between the cross – sectional data and time series data with reference to
the examples considering the demographic profile and lifestyle nature of the consumers.
Cross – sectional Data Time Series Data
It focusses on the observation of frequent
factors on the same point at the same time
period (Cleff, 2019). Such as, the revenue
which has been generated by the company
of various goods in a year.
It focusses on a factor over a specific period
of time.
For example, the total income of a product
is 3 years.
The retailer should think about using cross-sectional data because it collects
information on a variety of aspects such as lifestyle preferences and demographic profiles. As
a result, the store will be able to comprehend their target clients using this strategy..

TASK 4
(a) Draw a network diagram which shows the movement of forwards and backward passes.
s

(b) Identify the critical path and duration of the project.
The critical path has been identified as A-C-E-I-J of 23 weeks. While the duration of the
project is stated as 10.

(c) Distinguish between critical and non – critical activities.
Critical actions are those with a clearly defined end and start time. If these operations are
postponed, the project will almost certainly be delayed as well. Non-critical tasks, on the other hand,
determine the path that does not have any time constraints and can work suitable.
TASK 5
(a) Construct a correlation matrix and calculate the coefficients between quarterly sales and
total cost and average order value and gross profit.
Coefficient of
correlation
Coefficient of
determination
Quarterly Sales Revenue and total
costs 0.54003673 0.29163967
Quarterly Sales Revenue and
Average order value 0.974847027 0.950326726
Quarterly Sales Revenue and gross
profit 0.423092657 0.179007396
(b) Identify the best predictor of the quarterly sales, explain the reason.
The finest forecaster should be between the coefficient of average order value and quarterly income
with 0.97. As the best predictor is the highest correlation coefficient.

(c) Draw a scatter graph and show a trend line of the regression equation.
0 500 1000 1500 2000 2500 3000
0.00
20.00
40.00
60.00
80.00
100.00
120.00
f(x) = 0.0311935609089604 x + 10.2667468286301
R² = 0.950326726324606
Quartely sale revenue and average order value
Quarterly sales revenue
Average order value
(d) Interpret the coefficient of correlation and determination.
The coefficient of correlation shows the level of degree of relatability at which the variable
are linked to each other. While on the other hand, determination shows that approximately it is 95%
related to the regression model and applicable in the data.
(e) State the equation of regression and interpret the value of intercepts.
The equation of Regression is:
Y = 0.0312X + 10.267
Coefficient
s
Standar
d Error t Stat
P-
value Lower 95%
Upper
95%
Lower
95.0%
Upper
95.0%
Intercept
9.82273122
9
2.07508
5
4.73365
1
8.17E
-05
5.53996532
8
14.105
5
5.53996
5
14.105
5
Sales
Revenue 0.03146122
0.00149
7 21.019
5.78E
-17
0.02837197
8
0.0345
5
0.02837
2
0.0345
5

TASK 6
1. Calculate the coefficients of variation for business A and B.
Venture A:
Coefficient of variation = (Standard Deviation / Net EV) * 100 %
= (30.08 / 47.0) * 100 = 64
Venture B:
Coefficient of variation = (Standard Deviation / Net EV) * 100 %
= (13.32 / 41.2) * 100 = 32.33
2. By assuming that the risk of retailer is negative, which project should be chosen?
The retailer should consider going with the Project B for the purpose of investment as the low
coefficient of variation portrays the lower level of dispersion around the value of mean.
TASK 7
Give a reflective learning through the project.
By taking part in the above project, I can improve a variety of talents. It provides me
with a broad picture of the situation as well as financial authority that will be advantageous to
my professional future. When I completed this project, I was ecstatic since I knew it would
boost my knowledge and productivity. After completing the above presentation, my
confidence grew. The most difficult aspect of the endeavour is misjudging numbers. I had
problems matching the numbers because of these issues. Next time, I'll concentrate on
understanding formulas that will make my future project's complex numbers easier to
understand.
PART 2
1. Estimate the variable cost through high – low method.
Variable Cost per unit = (Highest Activity Cost - Lowest Activity Cost) / (Highest Activity
Units - Lowest Activity Units)
= (4,00,000 - 1,83,200) / (36,000 - 13,320) = 9.56

2. Calculate the monthly fixed cost.
Fixed Costs = Highest Activity Cost - (Variable Cost Per Unit * Highest Activity Units)
= 4,00,000 - (9.55 * 36,000) = 56200
3. Calculate break even of January 2021.
No of units to be sold in January to meet break – even point = Fixed costs / (Selling price per
unit - Variable cost per unit)
= 56200 / (12.45 – 9.55) = 19380
4. How many t-shirts should be sold to achieve the target profit in January 2021.
No of units to be sold in January to achieve a profit = (Estimated Profit + Fixed Costs) /
(Selling price per Unit- Variable cost per unit)
= (2,00,000 + 56200) / (12.45 - 9.55) = 256200 / 2.9 = 88344.82 units
5. Calculate margin of safety.
Margin of safety = (Current Sales Level – break-even point) / Current Sales level
= (88345 – 19380) / 88345 = (68965 / 88345) * 100 = 78.06%
6. Interpret the above calculations.
(a) The high- low method gives the advantage of calculating the variable and fixed cost only
with the help of sales in units and total cost. As it uses the highest and lowest action of units and
costs.
(b) The fixed cost is calculated included in the amount while the variable cost is calculated in per unit.
The variable cost is 9.56 per unit whereas the fixed cost is 56200 for all the unit that is sold and
produced.
(c) The number of units that must be manufactured to accomplish a breakeven is at least 19380 units.
It is approximately the average number of units that the firm is selling in the months from July to
December.
(d) To attain a target profit of £200000, the organisation must sell at least 88345 units. It is a huge
number considering the monthly sales of the firm. It means that it needs to increase its business
process by establishing more labour and machinery.
(e) The margin of safety is 78.06% on the sales units of the target profit which is required to be
achieved.

(f) Cons of Breakeven analysis:
 The level of accuracy of the calculation is depending on the data authenticity.
 The relationship between the variable costs and sales was not ascertained.
REFERENCES
Books and Journals
Cleff, T., 2019. Applied statistics and multivariate data analysis for business and economics:
A modern approach using SPSS, Stata, and Excel. Springer.
Ghosh, A., 2022. Making It Count: Statistics and Statecraft in the Early People's Republic of
China (Vol. 23). Princeton University Press.
Bruce, N., Pope, D. and Stanistreet, D., 2018. Quantitative methods for health research: a
practical interactive guide to epidemiology and statistics. John Wiley & Sons.
Keller, G., 2017. Statistics for Management and Economics+ XLSTAT Bind-in. Cengage
Learning.