Business Plan on Bicycle

ARE WE FAMILIAR WITH THIS?

NOBODY CAN ESCAPE.

WHAT IS HAPPENING WITH US IN THIS CASE?

If you are

clever than

teachers…

WHERE ARE YOU GOING?……SIT DOWN

If you are

not...

GO LATE IN THE CLASS AND…?

Have to

find out

a solution

from this..

AN EASY SOLUTION

ROADSTAR BICYCLE CO. LTD. GO AHEAD WITH A ECO-FRIENDLY VEHICLE

ROADSTAR BICYCLE COMPANY LTD.

312/a, Panthapath, Dhaka.

BOARD OF DIRECTORS

AREA OF OPERATION

Dhaka

Chittagong

Rajshahi

Brisal

Khulna

Rangpur

Sylhet

Maymensingh

PRODUCT RANGE

Kids Bicycle

Men Bicycle

Women Bicycle

Cycling helmet

Navigation device

KIDS BICYCLE

Features:

Easily handling

Smooth running

Strong

supportive wheel

Comfortable

MEN BICYCLE

Features:

Strong body

Easy moving

Hydraulic

break

Front & back

light

Gear system

BICYCLE FOR GIRLS

Features :

Easy ride

Light

Gear

Comfortable

CYCLING HELMET

Why our helmet?

Safer

Easy portable

Strongest

Well vantilated

NAVIGATOR

Features :

Navigation

service

Speed meter

Solar charger

Anti-

harrasement key

GPS facility

LATEST MANAGEMENT ACCOUNTING TOOLS

Just in time(JIT) system

PULL SCHEDULING

TOTAL QUALITY MANAGEMENT

LIST OF DIFFERENT COST

Particulars Variable

cost

Fixed cost Product

cost

Period

cost

Direct materials:

8,000,000

8,000,000

Direct labor 5,000,000 5,000,000

Manufacturing overhead 3,000,000 3,000,000

Administrative cost 700,000 700,000

Selling cost 300,000 300,000

Advertising cost 500,000 500,000

Sells commission 500,000 500,000

Depreciation 500,000

500,000

Insurance cost 500,000

500,000

TOTAL FIXED COST

fixed cost

2.5m

0 3000

Number of unit

Co

st

pe

r u

nit

VARIABLE COST PER UNIT

variable cost

5833

0

1

Unit

Co

st

JOB ORDER COSTING

Predetermined overhead rate

= Estimated total manufacturing overhead cost

Estimated total amount of allocation base

= 3,000,000/ 40,000 Direct labor hour

= Tk.75

Overhead Applied to the job

= (POHR*Actual direct labor hour)

= 75* 12.5

= Tk.937.5

JOB ORDER COSTING

ROADSTAR BICYCLE CO. LTD.’S

SCHEDULE FOR COST OF GOODS SOLD

Particulars Amount(tk.) Amount(tk.)

Beginning Inventory 1,000,000

(+) Raw material Purchase 7,000,000

Raw material available for production 8,000,000

(-)Ending raw material inventory 1,300,000

Raw material used in production 6,700,000

(+)Direct labor 5,000,000

(+)Manufacturing Overhead 3,000,000 8,000,000

Total Manufacturing cost 14,700,000

SCHEDULE FOR COST OF GOODS SOLD (CONT.)

Praticulars Amount Amount

Total manufacturing cost 14,700,000

(+)Beginning work in process inventory 2,500,000

Total work in process for the period 17,200,000

(-)Ending work in process 1,200,000

Cost of goods manufactured 16,000,000

(+)Beginning finished goods inventory 4,000,000

Goods available for sale 20,000,000

(-)Ending finished goods inventory 2,500,000

Cost of goods sold 17,500,000

ROADSTAR BICYCLE CO. LTD.’S

INCOME STATEMENT(CONTRIBUTION FORMAT)

Particulars Amount(tk.) Amount(tk.)

Sales 22,500,000

(-)Variable cost:

Direct material

Direct labor

Manufacturing overhead

Sales commission

Others cost

6,700,000

5,000,000

3,000,000

500,000

2,300,000

17,500,000

Contribution margin 5,000,000

(-)Fixed cost:

Administrative cost

Insurance cost

Depreciation cost

Advertisement cost

1,000,000

500,000

500,000

500,000

2,500,000

Net operating income 2,500,000

CONTRIBUTION MARGIN RATIO (CM RATIO)

Total Per Unit CM Ratio

Sales (3000bicycles) 22,500,000.00 7,500.00 100%

Less: Variable expenses 17,500,000 5,833 78%

Contribution margin 5,000,000 1,667.00 22%

Less: Fixed expenses 2,500,000

Net operating income 2,500,000.00

Roadstar Bicycle Company

Contribution Income Statement

For the end of the year 2014

$5,000,000 ÷ $22,500,000 = 22%

6-32

BREAK EVEN POINT

In unit sales:

Profit = Unit CM * Q – Fixed expenses

0 = 1666.7*Q – 2,500,000

Q = 1500 units

In dollar sales= Fixed expenses

CM Ratio

= tk. 2,500,000/0.2222

= tk. 11,245,000

BREAK EVEN POINTS ON GRAPH

Total revenue

Variable cost

2.5m

Fixed Expense

0 1500 Unit sales

To

tal

sa

les

Break even point

WHAT IF ANALYSIS

If we increase sales volume by 1000 units

i.e. 4000units and average sales price

decrease by tk.500 i.e. tk.7000, then the

scenario is:

Profit=Unit CM*Q – Fixed expense

=1667*4000 - 2,500,000

=4,166,667

The average selling price of a of a bicycle is tk.7500

and the average variable expense per bicycle is tk.

5833 . The average fixed expense per year is

tk.2.5m. Using the formula method we determine the

sales dollars that must be generated to attain target

profits of tk.3m per year.

Profit = (Sales – variable expense) – Fixed expenses

3,000,000= Sales – 17,500,000 – 2,500,000

Sales = tk.23,000,000

Per unit sales = 23000,000/3000 Units = tk.7,667

CVP ANALYSIS

NEW PROMOTION

20% DISCOUNT FOR FBS STUDENT

INSTALLMENT PAYMENT SYSTEM FOR STUDENTS

ANY

QUESTION

??