However it is advised that the company follow the

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Gupta to proceed with the fly ash brick project.However, it is advised that the company follow the below recommendations to ensure that the company is profitable. First and foremost, it is advised that Sharma and Gupta ensure that the amount of sales are secured before investment. This is done by hopefully signing a contract with housing developers, government building construction projects or environmentally aware NGOs to ensure sales exceed the breakeven number of unit bricks annually for the duration of the project which is 5 years. The price of the fly ash bricks should also be hedged at rs7 per brick for the duration of the contract. This is because based on the inflation rate forecast retrieved from Economist Intelligent Unit (EUI), International Monetary Fund (IMF), OECD and United Nations, the inflation rate will decrease for the following 5 years (India Inflation Forecast 2015-2020 and up to 2060, Data and Charts, 2017). The inflation rate forecast is shown in the figures below. Assuming that the inflation forecast is accurate, when the inflation rate decreases, the price to procure raw materials for the manufacturing of bricks will decrease, thus decreasing the total variable cost.This means that the gross income will increase as the selling price remains above rs7 while the variable cost of rs4.5 deceases. Hedging of price for fly ash is not recommended as the price will decrease with the reduction of inflation rate. Figure 2: EIU and OECD inflation rate forecast
15Figure 3: IMF and UN inflation rate forecast In order to achieve the highest gross profit percentage, a business owner might use the "All Costs Plus Profit" method of pricing. This method of using gross profit percentage factors in the total costs of an item, from manufacturing all the way through to delivery, and then adds in the desired profit percentage. In other words, rather than allowing market forces to determine how much of a profit percentage a business makes, this method creates the percentage the business owner desires. The disadvantage to this method of determining gross profit percentage is the possibility customers will not pay the cost of the item. It is also possible to simply increase gross profit by increasing the selling price above rs7 or decreasing the variable cost below rs4.5. Thus, it is recommended that Gupta and his partners do not proceed with the project until they are able to procure more sales, have the equipment to meet the required production and increase selling price or reduce overall cost. It is seen that the planning for the project was immature as no analysis was done on the annual increment to personnel cost, routine expenses and production expenses. However, if all these recommendations are met and there it is profitable, the environmental benefits are a driving force to start the business.
166.Conclusion Based on the CVP analysis on break-even point, gross profit margin, net profit margin and cash flow analysis, it is not recommended that Gupta and his partners proceed with the

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