Table 6 finance costs 5 as the show is table 6 by the

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Table 6 : Finance Costs
5As the show is Table 6 by the time Year 5, if the company will not take any refinance loan, it will finish paid liabilities. 3.3 Variable Cost Variable costs are those that stay same per unit but the change in total as production increases or decreases (Jackson & Sawyer, 2007). Table 5 below shows expenses related to the volume of production. For variable cost consideration, table 5 illustrates the major point there for cost management will be a conversion of the given monthly variable costs to the variable cost per one brick. The reason is that we focus on unit cost as well, whereas given estimations are for 200,000 bricks per month. As given in the table, the unit variable cost (UVC) is Rs4.5 to produce one unit brick (UVC: 900,000/200,000 = Rs4.5 per unit). In addition, Sharma has decided the selling price of bricks will be Rs7 per unit. Table 7 : Variable Costs Table 7 shows the variable cost in the fly ash brick project. The cost of variable cost every month will be Rs 900,000 and yearly will be Rs 10, 800, 000. After 5 years the variable cost will be Rs 54,000, 000. Costs per unitCostsAccumulatedCosts for every 200,000 BricksPer UnitYear 1Year 2Year 3Year 4Year 5For 5 YearsRsRsRsRsRsRsRsRsFly ash250,0001.2503,000,0003,090,0003,182,7003,278,1813,376,52615,927,407Gyspum250,0001.2503,000,0003,090,0003,182,7003,278,1813,376,52615,927,407Lime300,0001.5003,600,0003,708,0003,819,2403,933,8174,051,83219,112,889Sand40,0000.200480,000494,400509,232524,509540,2442,548,385Electricity (for lighting)10,0000.050120,000123,600127,308131,127135,061637,096Labor50,0000.250600,000618,000636,540655,636675,3053,185,481Total900,0004.50010,800,00011,124,00011,457,72011,801,45212,155,49557,338,667Costs per unit4.5004.6354.7744.9175.065Price per unit7.0007.0007.0007.0007.0007.000Costs Per MonthCosts Per Year
63.4 Cost Volume Profit (CVP Analysis) Cost Volume Profit (CVP) analysis is to determine what affects changes in the cost, price or volume in the short run (Hermanson, Edwards, & Ivancevich, 2011). This CVP analysis is to determine the break-even point of cost and volume of goods and can be useful for Gupta to make a decision. The formula of CVP analysis is px = vx + FC + ProfitIn the above formula, pis price per unit; vis variable cost per unit; xare total number of units produced and sold; and FCis total fixed cost This CVP has been divided into three categories which are fixed cost, finance cost and fixed cost. The project’s costs classified as below:Monthly Bricks Need To Sell = Total Fixed Costs + Finance Costs Price per unit - Variable costs per unit = 4, 140,000 2.50 = 1, 656,000 Units per month Monthly Revenue = 11,592,000.00 Rs permonth * excluding annual depreciation
7Table 8 : Cost Volume Profit 3.5 Break Even Analysis In order to identify sales volume, the consultant must run a break-even analysis (BEA) to differentiate price and cost scenarios. The BEA is a study of a mathematical relationship between cost and sales revenue, under a given set of assumptions regarding the firm`s fixed and variable costs (Dictionary, 2017). When the company’ break even where costs and revenues are equal, meaning that company neither makes a profit or loss. An additional advantage of BEA is to provide an idea whether or not revenue of the product is possible to cover all costs.

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