Business Analytics
1
,Table of Contents
“Question 1”.....................................................................................................................................3
“Question 2”.....................................................................................................................................7
“Question 3”...................................................................................................................................11
References......................................................................................................................................16
2
, “Question 1”
a) “Develop a mathematical model using the cost information above”
Given information:
“Variable cost/unit = £0.90”
“Total Fixed Cost = £100,000”
“Sales Price/unit = £3.00”
“Budgeted Annual Output = 200,000 units”
Based on the above information, the profit can be calculated by using the profit formula as stated
in (Nechaev and Rashputina, 2020):
P= ( Sales price−Variable Cost ) × Budgeted Output −¿ Cost
Therefore,
P= (3.00−0.90 ) ×200,000−100000
P=2.10 × 200000−100000
P=420000−100000
P=320000
b) “Calculate the profit or loss of KB Ltd. using the above information”
Calculating the profit or loss using the following formula:
Profit of loss=Total revenue−( Total¿Cost + TotalVariable Cost )
As we know,
1. Total Variable Cost =Budgeted Annual Output × Variable Cost per unit
Total Variable Cost =200000 ×0.90
Total Variable Cost =180000
3
1
,Table of Contents
“Question 1”.....................................................................................................................................3
“Question 2”.....................................................................................................................................7
“Question 3”...................................................................................................................................11
References......................................................................................................................................16
2
, “Question 1”
a) “Develop a mathematical model using the cost information above”
Given information:
“Variable cost/unit = £0.90”
“Total Fixed Cost = £100,000”
“Sales Price/unit = £3.00”
“Budgeted Annual Output = 200,000 units”
Based on the above information, the profit can be calculated by using the profit formula as stated
in (Nechaev and Rashputina, 2020):
P= ( Sales price−Variable Cost ) × Budgeted Output −¿ Cost
Therefore,
P= (3.00−0.90 ) ×200,000−100000
P=2.10 × 200000−100000
P=420000−100000
P=320000
b) “Calculate the profit or loss of KB Ltd. using the above information”
Calculating the profit or loss using the following formula:
Profit of loss=Total revenue−( Total¿Cost + TotalVariable Cost )
As we know,
1. Total Variable Cost =Budgeted Annual Output × Variable Cost per unit
Total Variable Cost =200000 ×0.90
Total Variable Cost =180000
3
