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Sales Commission Cost Analysis

The document presents cost and profit analyses for a company across multiple scenarios (A1-A5). It shows sales revenue, variable expenses, fixed expenses, contribution margin, and profit for each scenario. Scenario A1 is for the current operations at 90,000 units. Subsequent scenarios examine the impact of changes in volume, price, costs and target profit on financial performance.

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aparna153
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174 views7 pages

Sales Commission Cost Analysis

The document presents cost and profit analyses for a company across multiple scenarios (A1-A5). It shows sales revenue, variable expenses, fixed expenses, contribution margin, and profit for each scenario. Scenario A1 is for the current operations at 90,000 units. Subsequent scenarios examine the impact of changes in volume, price, costs and target profit on financial performance.

Uploaded by

aparna153
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd

Cost/Unit

Sales (90000 Units @ Rs 4) Rs. 360,000.00 Rs. 4.00


Cost of goods sold
Direct Materials Rs. 90,000.00 Rs. 1.00
Direct Labor Rs. 90,000.00 Rs. 1.00
Factory overhead
Variables Rs. 18,000.00 Rs. 0.20
Fixed Rs. 80,000.00 Rs. 98,000.00 Rs. 278,000.00 Rs. 0.89
Gross Margin Rs. 82,000.00 Rs. 0.91
Selling Expenses
Variable
Sales Commission Rs. 18,000.00 Rs. 0.20
Shipping Rs. 3,600.00 Rs. 21,600.00 Rs. 0.04
Fixed
Advertising Salaries Rs. 40,000.00 Rs. 61,600.00 Rs. 0.44
Admin Expenses
Variable Rs. 4,500.00 Rs. 0.05
Fixed Rs. 20,400.00 Rs. 24,900.00 Rs. 86,500.00 Rs. 0.23
Net Loss Rs. -4,500.00 Rs. -0.05
A1 Cost/Unit
Sales Rs. 360,000.00 Rs. 4.00
Variable Expenses Rs. 44,100.00 Rs. 0.49
Fixed Expenses Rs. 320,400.00 Rs. 3.56
Contribution Rs. 315,900.00 Rs. 3.51

A2 (a) Cost/Unit
Sales (150000@0.85*4) Rs. 510,000.00 Rs. 3.40
Variable Expenses Rs. 69,000.00 Rs. 0.46
Fixed Expenses Rs. 320,400.00 Rs. 2.14
Contribution Rs. 441,000.00 Rs. 2.94
Profit Rs. 120,600.00 Rs. 0.80

A2 (a) Expected new Vol 135000


New Price Rs. 5.00
New Advertising cost Rs. 190,000.00
New Sales Commision Rs. 67,500.00
Cost/Unit
Sales (135000@ Rs 5) Rs. 675,000.00 Rs. 4.50
Variable Expenses Rs. 106,650.00 Rs. 0.71
Fixed Expenses Rs. 470,400.00 Rs. 3.14
Contribution Rs. 568,350.00 Rs. 3.79
Profit Rs. 97,950.00 Rs. 0.65

A3 New Volume 130000


Target Profit 3185
Cost/Unit
Sales (130000@ Rs 4) Rs. 520,000.00 Rs. 3.47
Variable Expenses Rs. 63,700.00 Rs. 0.42
Fixed Expenses Rs. 459,485.00 Rs. 3.06
Contribution Rs. 456,300.00 Rs. 3.04
Profit Rs. 3,185.00 Rs. 0.02
Increase in Advertising Rs. 139,085.00

A4 Volume 60000
Cost/Unit
Sales Rs. 301,400.00 Rs. 5.02
Variable Expenses Rs. 21,000.00 Rs. 0.35
Fixed Expenses Rs. 280,400.00
Contribution Rs. 280,400.00 Rs. 3.51
Profit Rs. -0.00

A4
Sales (90000 Units @ Rs 4) Rs. 360,000.00
Cost of goods sold
Direct Materials Rs. 90,000.00
Direct Labor Rs. 90,000.00
Factory overhead
Variables Rs. 18,000.00
Fixed Rs. 80,000.00 Rs. 98,000.00 Rs. 278,000.00
Gross Margin Rs. 82,000.00
Selling Expenses
Variable
VARIABLE Sales Commission Rs. 18,000.00
Shipping Rs. 3,600.00 Rs. 21,600.00
Fixed
Advertising Salaries Rs. 40,000.00 Rs. 61,600.00
Admin Expenses
Variable Rs. 4,500.00
Fixed Rs. 20,400.00 Rs. 24,900.00 Rs. 86,500.00
Net Loss Rs. -4,500.00
Cost/Unit
Rs. 4.00 A1 Cost/Unit
Sales Rs. 360,000.00 Rs. 4.00
Rs. 1.00 Variable Expenses Rs. 224,100.00 Rs. 2.49
Rs. 1.00 Fixed Expenses Rs. 140,400.00 Rs. 1.56
Contribution Rs. 135,900.00 Rs. 1.51
Rs. 0.20
Rs. 0.89 A2 (a) Cost/Unit
Rs. 0.91 Sales (150000@0.85*4) Rs. 510,000.00 Rs. 3.40
Variable Expenses Rs. 369,000.00 Rs. 2.46
Fixed Expenses Rs. 140,400.00 Rs. 0.94
Rs. 0.20 Contribution Rs. 141,000.00 Rs. 0.94
Rs. 0.04 Profit Rs. 600.00 Rs. 0.00

Rs. 0.44 A2 (a) Expected new Vol 135000


New Price Rs. 5.00
Rs. 0.05 New Advertising cost Rs. 190,000.00
Rs. 0.23 New Sales Commision Rs. 67,500.00
Rs. -0.05 Cost/Unit
Sales (135000@ Rs 5) Rs. 675,000.00 Rs. 4.50
Variable Expenses Rs. 376,650.00 Rs. 2.51
Fixed Expenses Rs. 290,400.00 Rs. 1.94
Contribution Rs. 298,350.00 Rs. 1.99
Profit Rs. 7,950.00 Rs. 0.05

A3 New Volume 130000


Target Profit 16185
Cost/Unit
Sales (130000@ Rs 4) Rs. 520,000.00 Rs. 3.47
Variable Expenses Rs. 323,700.00 Rs. 2.16
Fixed Expenses Rs. 180,115.00 Rs. 1.20
Contribution Rs. 196,300.00 Rs. 1.31
Profit Rs. 16,185.00 Rs. 0.11
Increase in Advertising Rs. 39,715.00

A4 Volume 60000
Cost/Unit
Sales Rs. 241,400.00 Rs. 4.02
Variable Expenses Rs. 141,000.00 Rs. 2.35
Fixed Expenses Rs. 100,400.00
Contribution Rs. 100,400.00 Rs. 3.51
Profit Rs. -

A5 Cost/Unit
Sales #REF! Rs. 4.00
Variable Expenses #REF! Rs. 2.63
Fixed Expenses Rs. 140,400.00
Contribution Rs. 160,400.00
Profit Rs. 20,000.00

4x-(2.63x+4x*.05)= Rs. 160,400.00


Volume x= 137094.02
Rs. 224,100.00

FC=C-P
C=P+FC

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