Sales Unit Calculation for Desired Profit

This assignment focuses on calculating the required sales units to reach a specific profit target. It begins by outlining the relevant financial data, including selling price, variable cost, contribution margin, fixed costs, and break-even point. The core calculation involves determining the number of units needed to cover both fixed costs and the desired profit, considering the contribution margin per unit. The example demonstrates this process with specific figures.

RUNNING HEAD: Financial analysis and case study 1
Name of the student-
Topic-
University name-

Financial analysis and case study 2
Part-A
Question 9.45 on the Dorquary Hotel
Computation of budgeted room revenue for each of the three months
Budget- It is prepared to calculate the revenue and budget of the hotel for the three month.
This three month budget has been prepared to identify the total revenue and expenses
incurred by Dorquary Hotel for its business functioning.
These are the details of the rooms and occupancy which are given in below list.
Rooms Available 20
Rooms rate 180
Rooms occupancy 90%
In Jan,
Rooms rate 180+10%
Rooms occupancy 95%
In Feb,
Rooms rate 180+10%

Financial analysis and case study 3
Rooms occupancy 85%
These all the information has been given in the question and room occupancy rate has been
computed on the basis of same.
Computation of budgeted room revenue
Statement of budgeted room revenue
Dec Jan Feb
Rooms available 20 20 20
Rooms occupancy 90% 95% 85%
Total used rooms (Rooms
available * rooms occupancy) 18 19 17
Room rate 180 198 198
Room revenue (total used room *
rooms rate) 3240 3762 3366

Financial analysis and case study 4
Question 9.45 on the Dorquary Hotel (2)
Determination of occupancy rate
It is evaluated that occupancy rate of the Dorquary Hotel is determined on the basis of
season and other external factors of the business. Room revenue is increased with the
increased rate of occupancy. It is evaluated that in the peak season such as December and Jan
revenue of the rooms will be increased. The occupancy rate is increased in December and Jan
due to high demand of the clients in market. Ideally, December is the peak time when people
like to enjoy their life by taking offs (Ekren, Ekren & Ozerdem, 2009).
There are other factors which will affect the occupancy rate of Dorquary Hotel
 Particular season of the tourism
 Newly adopted systems and core competency of hotel to attract more clients on domestic and
international level.
 Implementing new rules and new alliance to attract more clients
 Conducting events and new clients oriented program
 Cost and hotel booking rate or price
 Brand image and services offered by Dorquary Hotel
 Strategic alliance and integration strategies adopted by Dorquary Hotel to attract clients from
domestic and international clients.
 Adopting cyber computing system to allow clients to book rooms and other hospitalities
services through online portal
Part-B
Question 2.572
Answer to question no-1

Financial analysis and case study 5
After evaluating the details and related facts of the case, it is observed that Anitah loh being a
salesperson has given a lucrative offer to Mr. Smith to influence his choice of decision to buy
software packages for his company. However, offer given by Anitah Loh is to influence Mr.
Smith to come down to check the company’s offered software packages (Bardach &
Patashnik, 2015).
Ethical concern
In this case, it is observed that Mr. Smith should not take this offer. If he wants to
check the software packages offered by Anitah Loh then he should go and check that
products on his own. This will keep Mr. Smith at the position where he could independently
analysis whether these software packages should be purchased by company for preparing
budget or not.
Answer to question no-2
Advantages and disadvantages to Practical Solutions Ltd of having an employee code of
conduct (Brigham & Ehrhardt, 2013).
Advantage Disadvantage
It will increase the regulatory compliance of
the organization.
It would surely result to keeping high ethical
compliance.
It will help company to adopt standard code
of conduct and employees oriented
organization culture.
Setting code of conduct will increased the
complexity of the business.
It will increase the formal regulatory
compliance and cost of the production of
company.
Practical Solutions Ltd has to follow set

Financial analysis and case study 6
It will help employees to determine the limit
or conditions while performing work in
organization.
If Practical Solutions Ltd has proper code of
conduct then it will increased the
transparency of business and motivates all
the employees to work ethically in
determined approach.
All the regulatory compliance and workmen
oriented policies will be kept at the top most
priority.
compliance program before implementing
any rules and procedure before adapting to
newly installed changes in value chain
activities.
It will increase the employee turnover and
result to increased cost of capital of
company.
This will destruct the balance score card and
will provide less efficient Key person
indicators of company.
Measured to be taken in such code of conduct
 Employees should strictly follow all the rules and regulations of the code of conduct
 Possible liberalisation and policies changes clauses should be included in this
particular code of conduct.
 All the code of conduct and policies should increase the overall productivity of
organization.

Financial analysis and case study 7
 Part-C
Question- 10.32
Chloe Enterprises operates a single-product entity and in this part of the paper there are
several computations has been done as below (Frias‐Aceituno, Rodríguez‐Ariza, & Garcia‐
Sánchez, 2014).
Answer to question-(a)
Computation of the break-even point- This point of the Chloe Enterprises reflects the point at
which there will be no loss no profit.
a) Calculation of breakeven point
Per unit Total
Selling price
$
60 $ 21,00,000
Less:
Variable cost
$
40 $ 14,00,000
Contribution
(Sales - variable
cost)
$
20 $ 7,00,000

Financial analysis and case study 8
Fixed cost
$
4,90,000
Break-even
point (Fixed cost
/ contribution) 24500 $ 14,70,000
Breakeven point of the company is 24500 in units and 14, 70,000 rupees in dollars.

Financial analysis and case study 9
Answer to question- 2B
Computation of margin of dollar of the company
B) Calculation of Margin of safety
In units In dollars
Margin of safety
(Sales -
breakeven point) 10500 $ 6,30,000
Margin of safety
Margin of safety is the point where the company earns the profit. The margin of safety
units of the company is 10500 units and in the dollars, it is 6, 30,000 (Vardon, Birt & Ingram,
2017).
Answer to question- 3c
Total profit of company- It is the amount of profit which company has earned through its
business system. This profit will be changed as changed in the units of the company to 32000
units (Christensen & Kent, 2016).
C) Calculation of total profit

Financial analysis and case study 10
Per unit Total
Total sales
$
60
$
19,20,000
Less: Variable cost
$
40
$
12,80,000
Less: Fixed cost
$
4,90,000
Profit (total sales -
fixed cost -
variable cost)
$
1,50,000
The total profit of the company would be $ 2, 10,000.

Financial analysis and case study 11
Answer to question-4d
Marketing strategy- These marketing strategies are implemented with a view to increase the
overall profit and turnover of the company.
D) Calculation of sales unit on the basis of
desired profit
Per unit Total
Selling price
$
60
$
21,00,000
Less:
Variable cost
$
44
$
15,40,000
Contribution
(Sales - variable
cost)
$
16
$
5,60,000
Fixed cost
$
4,10,000
BEP 24500 1470000

Financial analysis and case study 12
Desired Profit
$
1,50,000
Sales units to
achieve the desired
profit (Desired
profit /
contribution +
sales units) 33875
$
20,32,500
Through this calculations, it has been found that if the company wants to achieve the profit of
$ 210000 than the company must sales at least 37625 units to achieve the level (Brigham &
Ehrhardt, 2013).
Individual response
In this case, I would not recommend changes proposed in option-D as increment in
the variable cost is seen due to increased level of sales. However, at the same time, it will
decrease the overall fixed cost of company. Therefore I would suggest company to accept the
proposed changes.

Financial analysis and case study 13
References
Bardach, E., & Patashnik, E. M. (2015). A practical guide for policy analysis: The eightfold
path to more effective problem solving. CQ press.
Brigham, E. F., & Ehrhardt, M. C. (2013). Financial management: Theory & practice.
Cengage Learning.
Christensen, J., & Kent, P. (2016). The decision to outsource risk management
services. Accounting & Finance, 56(4), 985-1015
Ekren, O., Ekren, B. Y., & Ozerdem, B. (2009). Break-even analysis and size optimization of
a PV/wind hybrid energy conversion system with battery storage–a case study. Applied
Energy, 86(7), 1043-1054.
Frias‐Aceituno, J. V., Rodríguez‐Ariza, L., & Garcia‐Sánchez, I. M. (2014). Explanatory
factors of integrated sustainability and financial reporting. Business strategy and the
environment, 23(1), 56-72.
Vardon, M., Birt, J., & Ingram, J. C. (2017). . Business and National Accounting for Natural
Capital–Toward Improved Understanding and Alignment. Better Policy through Natural
Capital Accounting: Stocktaking and Ways Forward, 215.

Financial analysis and case study 14
Appendix
Rooms Available 20
Rooms rate 180
Rooms occupancy 90%
In Jan,
Rooms rate 180+10%
Rooms occupancy 95%
In Feb,
Rooms rate 180+10%
Rooms occupancy 85%
Statement of budgeted room revenue
Dec Jan Feb
Rooms available 20 20 20
Rooms occupancy 90% 95% 85%
Total used rooms (Rooms
available * rooms occupancy) 18 19 17
Room rate 180 198 198
Room revenue (total used room *
rooms rate) 3240 3762 3366

Financial analysis and case study 15
a) Calculation of breakeven point
Per unit Total
Selling price
$
60
$
21,00,000
Less:
Variable cost
$
40
$
14,00,000
Contribution
(Sales - variable
cost)
$
20
$
7,00,000
Fixed cost
$
4,90,000
Breakeven point
(Fixed cost /
contribution) 24500
$
14,70,000
Breakeven point of the company is 24500 in units and 14, 70,000 rupees in
dollars.
B) Calculation of Margin of safety
In units In dollars
Margin of safety
(Sales -
breakeven point) 10500
$
6,30,000
Margin of safety is the point where the company earns
the profit. The margin of safety units of the company is
10500 units and in the dollars, it is 6, 30,000.
C) Calculation of total profit
Per unit Total
Total sales
$
60
$
19,20,000
Less: Variable
cost
$
40
$
12,80,000
Less: Fixed cost
$
4,90,000
Profit (total sales
- fixed cost -
$
1,50,000
The total
profit of the

Financial analysis and case study 16
variable cost)
company
would be $ 2,
10,000.
D) Calculation of sales unit on the basis of
desired profit
Per unit Total
Selling price
$
60
$
21,00,000
Less:
Variable cost
$
44
$
15,40,000
Contribution
(Sales - variable
cost)
$
16
$
5,60,000
Fixed cost
$
4,10,000
BEP 24500 1470000
Desired Profit
$
1,50,000
Sales units to
achieve the
desired profit
(Desired profit /
contribution +
sales units) 33875
$
20,32,500
Through this calculations, it has been found that if the company
wants to achieve the profit of $ 210000 than the company must sales
at least 37625 units to achieve the level.

Financial analysis and case study 17