THE CASE OF A SUMMER PROJECT

REPORT
Presented by
SUDIP RAY
OBJECTIVE



To check whether the projected sales/forecast meets the
breakeven point in case the company shifts to distribution
SALES PER KG
Product Contribution Percentage on
selling price
Selling Price
Ghee 22 26% 84.61
SMP 18 23% 78.26
COST PRICE PER KG
Product Selling Price Contribution Cost Price
Ghee 84.61 22 62.61
SMP 78.26 18 60.26
VARIABLE COST PER KG
Product Ghee SMP
Central Sales Tax
Percentage
4% 2.5%
Actual Central Sales Tax 3.4 1.95
Distributors and retailers
commission percentage
15% 15%
Actual Distributors and
retailers commission
12.69 11.73
State Tax Percentage 8% 8%
Actual State Tax 6.76 6.26
TOTAL VARIABLE COST PER KG
Product Ghee SMP
Cost Price 62.62 60.26
Actual Central Sales 3.4 1.95
C&F and second leg freight 1.17 1.17
Actual State Tax 6.76 6.24
Total Variable Cost 73.95 69.62
FIXED COST
Cost Amount
Redesign Cost 100000
Distributor Appointment 150000
Distributor Conference 75000
Promotions considering
Nine cities and three months
432000
Consulting charges 7000
Overheads for seven branches
for 12months
5040000
Rent advance, tax registration 70000
Total Cost 5874000
BREAK EVEN FOR GHEE AND SMP

Let x be the kg of ghee
Let y be the kg of SMP

84.61x 73.95x + 78.26y 69.62y - 5874000=0
Or, 10.66x + 8.64y = 5874000

Considering x=y (same proportion of ghee and SMP) ;
19.3x = 5874000
Or x = 304353

Thus as 304353 kg per month sales, break even will be met in the first year
itself
FORECASTED SALES
Product SMP Ghee
2005-06 857100 2239800
2006-07 1321500 2605500
2007-08 1932900 2479800
CONCLUSION


Clearly considering all costs and contributions, for 304353
units of each of ghee and SMP, breakeven can be achieved.

In fact, as per the forecasted sales, more than breakeven can
be achieved