Internship I conducted enhanced my knowledge to

Internship Report on “Capital Investment of ACI Limited
Internship Report
Capital Invesment of ACI Limited

Course: Internship
Course Code: INT 4399
Submitted to:
Assistant Professor-Finance
School of business & Economics
United International University
Submitted by:
Rehana Sultana
ID: 111 141 455
Date of Submission: 16.09.18
Transmittal letter
2018, 17th September
ZinnatunnesaAssistant Professor-FinanceUnited International University
Subject: Submission of report on “Capital Investment of ACI limited”
Dear Madam,
I am pleased to submit the report that you asked for & gave me the authorization to work on “Capital Investment of ACI Limited” This report is an essential part of my course; I tried my best to work on it carefully and sincerely to make the report informative.

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The study I conducted enhanced my knowledge to make an executive report. This report has given me an exceptional experience that might have immense uses in the future endeavors and I sincerely hope that it could fulfill your expectations.

I have put my sincere effort to give this report a presentable shape and make it as informative and precise as possible.  I thank you for providing me with this unique opportunity.

Sincerely yours,
Rehana Sultana
111 141 455

In performing my assignment, I had to take the help and guideline of some respected persons, who deserve my greatest gratitude. The completion of this report gives me much knowledge. I would like to show my gratitude to Zinnatunnesa, Course Instructor, and United International University for giving me a good guideline for assignment throughout numerous consultations. I would also like to expand my deepest gratitude to all those who have directly and indirectly guided me in writing this report.

In addition, a thank you to Mam, who introduced me to the Methodology of work, whose passion for the report on “Capital Investment of ACI Limited” had lasting effects. I would like to give special thanks to my supervisor of ACI Limited, Mr. Harunur Rashid (Manager Accounts) for giving me the guidelines for preparing the report.
And many people, especially my colleagues and team members of itself, have made valuable comment suggestions on this proposal which gave me an inspiration to improve my assignment. I thank all the people for their help directly and indirectly to complete our assignment.

Executive Summary

This Report is a small scale Report. I cannot cover all the part. But it can be said that this report will help people who want to make report on Capital Investment. This report may also help others to understand the Capital Investment of ACI Limited because this report is done by interviewing of team members and employees from prominent organization. This report provides an analysis and evaluation of the Capital Investment of ACI Limited.

I was given a major duty to analyze the Capital Investment of ACI Limited. Because this is a small scale report and lacking in the questionnaire, there is a lot of lacking in the report.
The Purpose of the report is to analyze the capital investment of ACI Consumer Brands. For Analyzing the Capital Investment, This analysis is conducted in two different stages. One is collecting the authentic information from the Company which will help me to reach the destination of this project and another stage is knowing about my perceptions about the investment. This report also gives an overview of Capital Investment of ACI Consumer Brands. It gives the proper information about Capital Budgeting Techniques and Break even Analysis.

Chapter 1
Generally Capital investment means purchasing the fixed asset such as manufacturing plants and machinery that is expected to productive over many year for the purpose of furthering its business objectives. The goal of capital investment is to provide benefits to a company over the long term. The term capital investment has two usages in business. First, capital investment refers to money used by a business to purchase fixed assets, such as land, machinery, or buildings. Secondly, capital investment refers to money invested in a business with the understanding that the money will be used to purchase fixed assets, rather than used to cover the business’s day-to-day operating expenses. There are main three reasons for a business to make capital investments- 1) acquiring additional capital assets for expansion, enabling the business to, for example increase unit production, create new products, or add value; 2) taking advantage of new technology or advancements in equipment or machinery to increase efficiency and reduce costs 3) replacing existing assets that have reached end of life- for example, a high mileage delivery vehicle or an aging laptop computer
This assignment is prepared on “Capital Investment of ACI Limited”. ACI Limited engages in manufacturing pharmaceuticals, Consumer Brands, Livestock ; fishers Products ; marketing them along with fertilizer, seeds and other agricultural items.

ACI Pharmaceutical Business has achieved a commendable 17% growth in 2015 over the previous year. Pharmaceuticals are exported to 30 countries of 4 continents. The Consumer Brands Division grew by 11% and 18% in 2015 and 2016 respectively. ACI Fertilizer has had 34% growth in 2015 over the previous year while the growth has been recorded 21% at the mid of 2016 over same period last year.
With continuous process of business efficiency, ACI Limited has invested in human capital ; service quality for the improvement of Business. The Net income of ACI Limited over last year was 84.59%, Capital Spending was 108.25% and Revenue was 23.01%.

Preparing the internship report and doing the internship is compulsory for every BBA program student so that student can feel the practical life a corporate man or woman and can achieve the proper knowledge about organization. This report is my Finance course requirement. And another reason behind this report is to gain an expert knowledge and a practical knowledge about Capital Investment. This internship report has been prepared on the topic of “Capital Investment of ACI Limited”
From this report I get a practical knowledge about my learning in the Finance, On the other hand I have gained an excellent knowledge about Capital Investment ; Capital Budgeting. From this report, I get an organizational overview about ACI Limited.

I cannot cover all the information which was needed to prepare this report. But, I tried to cover as much as possible. I cannot have much ways in our hand to collect the adequate data. I tried my best to make this report more accurate. My main limitation was time constrain and another limitation was unavailability of adequate data. Information that is collected from those was not detailed. Time was not also adequate. Finally this is my first experience in making a report “Capital Investment of ACI Limited.” So my knowledge especially in such a research study is limited.

Type of Research:
This report is a Quantitative type of research in nature and it administered by collecting both primary and secondary data. It has tried to use both the primary and secondary sources of collecting information and some are to make the report presentable with as less abstraction as possible.

Types of data collection:
In order to attain the objective of the report, all-necessary information’s are prepared by collecting both primary & secondary sources of data. These are:
Primary data: Primary data collected directly from ACI Limited companies through face-to-face interaction. Several sources of data collection are used to make this report. The source of data are-
•Face to face communication.

•Telephone interview.

Secondary data:
Some secondary data collected to make the report more concrete. These data has been collected from:
• ACI Limited annual report.

•ACI Limited statistical report
•Web site: www.aci-bd.com1.6 My Responsibilities
I work in Finance and Planning Department of ACI Limited. I work under 4 monitors and one supervisor who assist me in learning the tasks. I work in Accounting Mirror Software. I prepare journal which goes to general ledger, trial balance and financial statement automatically. My main responsibilities are following below:
Prepared various types of Bills payable for different Business.

Prepared various types of payment voucher including Meeting expense, Training expense Salary Expense, Carrying Bill, Transportation Bill, Super Distributor Bill and so on.

Responsible for payment of Petty Cash, Incentives etc.
Responsible for Advance payment, Advance adjustment & Balance transfer.

Paid GRN in Material Planning Software.

Responsible for Vat Rebate, Vat deduction & Tax Deduction.

Responsible for Documents of MS Excel.

Accounting Rate of Return
Net Present Value
Profitability Index
Internal Rate of Return
Payback Period
This section is for proper classification of the entire report. I have classified this report into four chapters. I have given introduction in first chapter where I have discussed about the nature of the report, the purpose for the report and the objectives of the report and my responsibilities as an intern. I also mentioned about the historical background of ACI Limited, its vision, mission and different policies. Then I discussed about Capital Investment, Its features, Its Objectives. Then I talked about the capital investment named Savlon Twinkle Baby Diaper of ACI Consumer Brands. I analyzed its market condition, SWOT and Sales which is discussed. Then I also mentioned about capital budgeting process, techniques in 3rd chapter descriptively. I also showed how the investment of ACI Consumer gives positive CF, NPV, IRR, and PI. And finally I talked about Break Even Analysis in Capital Budgeting in last chapter.

Table 1.1 Report Outline
Chapter 2
2.0 Company Overview
ACI was established as the subsidiary of Imperial Chemical Industries (ICI) in the East Pakistan in 1968. After independence the company has been incorporated in Bangladesh on the 24th of January 1973 as ICI Bangladesh Manufacturers Limited and also as Public Limited Company. This Company also obtained listing with Dhaka Stock Exchange on 28 December, 1976 and its first trading of shares took place on 9 March, 1994. Later on 5 May, 1996, ICI divested 70% of its shareholding to local management. Subsequently the company was registered in the name of Advanced Chemical Industries Limited. Listing with Chittagong Stock Exchange was made on 22 October 1995.Advanced Chemical Industries (ACI) Limited is one of the leading conglomerates in Bangladesh, with a multinational heritage. They have a mission to achieve business excellence through quality by understanding, accepting, meeting and exceeding customer expectations. They follow International Standards on Quality Management System to ensure consistent quality of products and services to achieve customer satisfaction.

The total numbers of employee 8364.

Historical Date & Achievement of ACI Limited
1968 Established as a subsidiary of Imperial Chemical Industries ( ICI) in East Pakistan
24th January, 1973 Incorporation of ICI Bangladesh Manufacturers Limited
28th December, 1976 Enlisted with Dhaka Stock Exchange
5th May,1992 ICI Handed over 70% share to local management and changed the name in ACI Limited
9th March, 1994 First trading of shares took place
22nd October, 1995 Listed with Chittagong Stock Exchange
1995 Achieved ISO SOO1 for quality management
2000 Achieved ISO 14000 for environmental management system
ACI’s mission is to enrich the quality of life of people through responsible application of knowledge, skills and technology. ACI is committed to the pursuit of excellence through world-class products, innovative processes and empowered employees to provide the highest level of satisfaction to its customers.

Endeavour to attain a position of leadership in each category of its businesses.

Attain a high level of productivity in all its operations through effective and efficient use of resources, adoption of appropriate technology and alignment with our core competencies.

Develop its employees by encouraging empowerment and rewarding innovation.

Promote an environment for learning and personal growth of its employees.

Provide products and services of high and consistent quality, ensuring value for money to its customers.

Encourage and assist in the qualitative improvement of the services of its suppliers and distributors.

Establish harmonious relationship with the community and promote greater environmental responsibility within its sphere of influence.

Chairman’s Profile
Mr. M Anis Ud Dowla, the Chairman of ACI Limited, is one of the most successful personalities in Bangladesh business circle. He has maintained a high profile, and has provided leadership to business community in different capacities. Mr. Dowla served in the British Oxygen Group of UK in Pakistan, Bangladesh and Kenya for 27 years, including 12 years as Managing Director of Bangladesh Oxygen Ltd. In 1987, he became the Group Managing Director of the three ICI companies in Bangladesh. With experience gathered while working with British Multi-nationals for over 32 years, Mr. Dowla has continued to maintain the multinational culture and management style in ACI, with special emphasis on quality, productivity and customer services. M. Dowla was the President of Metropolitan Chamber of Commerce & Industry for three terms in 1975, 1976 & 1977 and the President of Bangladesh Employers’ Federation for four terms in 1976, 1977, 1994 and 1995.

2.1 ACI Policy:
Quality Policy
It is the vision of ACI Limited to achieve the high level of customer’s satisfaction by providing products and services of high and consistent quality, ensuring value for money to the customers. Therefore to ensure the consistence in quality of products and service, ACI Limited is always maintaining the International Standards on Quality Management System. Furthermore, this company also maintaining all the national requirements to run its all currents businesses and current Good Manufacturing Practices (cGMP) followed by the World Health Organization (WHO). All the internal business processes and business decisions of the management board of ACI Limited consider the quality at the very first. As a result all the employees have to follow the documented procedures to ensure the quality standards. ACI Limited is also pooling the skilled and knowledge candidate as their employees and launching various training programs for their employees to get the quality services from them. Besides ACI is always bring the new methods and technologies in its manufacturing sectors which is also bringing the big changes in the industries in terms of both cost and quality.

Environmental Policy
ACI always concern about the eco-friendly manufacturing operation procedure to ensuring continual improvement in the utilization of resources and prevention of pollution or degradation of the environment.
Keep this in mind. ACI will comply fully with all local and national environmental regulations.
Protect natural resources like water and energy for sustainable development, and adopt environmentally safe processes.
Ensure appropriate treatment of all effluents prior to discharge.

Ensure appropriate communication with internal and external interested parties on environmental issues.
Create awareness on environmental issues among our employees and contractors.
Ensure waste management in an environmentally responsible manner through continuous up gradation of technology. For UN World ISO 14001 Environmental Management System ACI is the first company in Bangladesh to have obtained ISO 14001 Certification for Environmental Management System.

2.2 Subsidiaries of ACI
2.4 Finance & Planning Department
ACI Finance and Planning function is the nerve centre of the conglomerate. Being the nature of the structure, ACI Finance and Planning plays the centralized role in all kinds of financial and accounting services. Meaning it handles financial and accounting matters of not only ACI Limited but also of all of its subsidiaries supporting the mission and vision of the Group. The major areas of its activities include:
Risk management and Internal Audit
General accounting
New business management
Corporate Finance
Credit Management
Accounts payable management
Chapter 3
Capital Investment
3.0 Capital Investment
In every year, ACI Limited invested in many capitals for the business purpose. Capital Investment decision is one the key decision of financial management which relates to the investment selection and course of action that will generate returns in the future over the lifetime of the project. As ACI Limited consists of 4 businesses, I am going to focus on the capital of Consumer Business.

Savlon Twinkle Baby Diaper is one of biggest project of ACI Consumer Brand. It is the product of Baby Care Category products of ACI Consumer Brands. Savlon Twinkle Baby was launched on 20 may in 2017.

ACI Limited Purchased full servo T shapes Baby Diaper Machinery for the Diaper Project in 2017. It costs 100,668. Its P & M was 113,466,679 and the Sub Station was 4750000.

3.1 Market Analysis of Diaper:
Marketing Analysis is a study of the dynamism of the market. It is the attractiveness of a special market in a specific industry. Marketing analysis is a business plan which presents information that related to the market in which someone is operating in.

The first Diaper was introduced in 1961 in England. It was known as Pampers Baby Diaper. It is the product of P & G Company which started their journey as subsidiary company in Bangladesh in 1996. The Market size of the diaper is increasing day by day. The market size of baby diapers in the country is around TK 4 billion a year according to market players. And it grows by more than 40% year on year. Local companies are meeting 50 % domestic demand for baby diapers and Multinational are fulfilling the rest of the demand in Bangladesh.

The Special features of Savlon Twinkle Baby Diaper are wetness indicator, elastic waist band and side tape, Velcro belt, comfortable embossed design and anatomic Shape. ACI Consumer Brand is giving the best quality to the mothers for their new born babies. Because of women’s involvement in jobs, increasing of purchase capability and health awareness, the usage of Savlon Twinkle baby diaper is increasing. Currently, the twinkle baby diaper is selling across the country.

The real competitors of this product are product is Pampers, Chu Chu and Super Mom. Imported diapers still dominate the market, but locally made ones are gaining ground by competing in terms of price and quality.

The Sale of Baby Diaper is increasing. The NSI of Diaper was 942764 on May 2017 whereas The NSI is now 5310958. So the market position is Savlon Twinkle Baby Diaper is getting high.

The fund for this project was taken from Bank. Bank provided loan for this capital investment.

3.2 SWOT Analysis of Savlon Twinkle Baby Diaper:
SWOT Analysis refers to strength, Weakness, Opportunity and Threat. This analysis plays a vital role for the improvement of the business growth. It is a framework that used to evaluate a company’s position. The SWOT Analysis of Savlon Baby
Strengths Weaknesses
Strong Brand Image
High Quality
New product
Price is Comparatively high
Opportunities Threats
Diversified market segmentation
Growth of consumer demand
Entrance of new Brands
Existing Brands
3.3 Capital Budgeting
Capital Budgeting is very important for a company for number of reasons. Increasing the revenues and decreasing the cost expenses, Capital Budgeting plays a vital role. Many Corporations creates an annual budget which will help management to evaluate the total performance of the organization. On the other hand, Capital Budgeting focuses more on the long term investments.

Exchange of current funds is involved for the benefits to be achieved in future
Future Benefits of capital investment are expected to be realized over a series of years
Huge funds are involved in capital investment
Decisions of capital investments are irreversible
High degree of risk is involved in capital investment
Capital Investment has long term and significant effect of probability of the concern
A Capital Budget helps the management in:
achieving capital goals & determine in which level the company is at
assisting in ranking of projects according to their true profitability
calculating the future cash flow
making a choice for long term investments
controlling of expenditures and monitoring of crucial aspects of project execution
Major steps of Capital Budgeting:
Estimate of cash flow
Assessment of risk
Calculating the discount rate
Calculate the PV of the expected CF
Accept or Reject the project
Capital Budgeting techniques
Evaluating the potential benefits and risk of large expenses, Capital Budgeting is very important for the investors. There are different Techniques for budgeting which is given below:

Capital Budgeting Process:
Steps for Capital Budgeting process as follows:

Chapter 4
Literature Review and Research
4. Literature Review and Research of Savlon Twinkle Baby Diaper
4.1 Introduction
Human baby skin is so sensitive when it just born. The condition of the skin changes in various steps as the surrounded environment changes for the baby. The true matter of fact is the skin experiences enormous changes during the postnatal period as it is final adaption of a baby outside the uterus though the final stages of structural and functional maturation that began during the third trimester of pregnancy (Holbrook & Sybert, 1995).
Until the 19th century, American mothers wrapped their babies in swaddling. Then they began putting infants in some version of cloth diapers or pads, giving their wearers a greater range of movement and ensuring they didn’t have to be held all the time. Pampers began marketing the first disposable diaper in 1961. The early versions were leaky, bulky, and generally inferior to cloth diapers. (In the 1970s, my mother scorned them.) But when the technology improved, thanks to those polymer pellets—which allow today’s diapers to absorb up to 500 milliliters of water—the disposable diaper achieved “something like perfection,” in the words of Malcolm Gladwell in a 2001 New Yorker article.

The composition of baby diaper has evolved in past few decades. The technology used has greatly changed; the size has become smaller yet efficient. Economic growth spurred increased the use of diapers in Bangladesh. Bangladesh mostly imports diapers from Australia, China, Algeria, Iran, Egypt and Japan etc. Two local manufacturers, ACI Consumer and Bashundhara contribute small but significant amount to the diaper market recently. Currently the annual market for baby diapers stands at nearly Taka 300 crore, registering more than 40% growth a year. Bangladesh is expected to be one of the biggest markets for baby diapers by 2020, according to the industry. Given the composition and how it is discarded makes it harder to dispose. Though the cellulosic materials are considered as biodegradable, their assimilation by the environment takes a few years to few hundred years.
The market for baby diaper is worth between Tk 250 crore and Tk 350 crore a year, growing at 25 percent to 35 percent a year, according to industry insiders in Bangladesh.
4.2 Problem Statement
Diapers have been used for care of babies since decades to prevent soiling and for social convenience. However, the use of diaper poses a risk of developing diaper dermatitis. Recent innovations in diaper technology have led to development of superabsorbent disposable diapers, emollient delivering diapers and breathable diapers. These newer types of diapers reduce the incidence of diaper dermatitis. The non-biodegradable material used in superabsorbent diapers is, however, a matter of serious concern because of its toxic effects and environmental pollution ( Indian J Pediatr. 2004 October)
There is no doubt that disposable diapers are wonderfully convenient but are they safe for the babies? It is clear that there are also a number of potential dangers. Most of the parents are not aware of the adverse effects of this product being in contact with baby’s reproductive organs 24 hours a day more than two years and the long-term effects it causes to the surroundings. Disposable diapers have been implicated by diapering proponents like leak proof polymers, super absorbent polymers and some scented chemicals which are the key factors for everything from chronic diaper rash, respiratory problems like asthma, male infertility even to testicular cancer.( J Environ Sci Eng. 2012 July)
4.3 Methodology and Sampling:
For identifying the capital investment, I took information from the employees and supervisors. I communicate them to take the information through phone, email and face to face conversation. I also take information from website, face book, newspaper article.

Data Analysis
Chapter 5
5.1 Capital Budgeting Analysis of Twinkle Baby Diaper
The Estimated Budget of this Twinkle Baby Diaper is 11 Crore. The Depreciation rate is 20% Interest rate is 12%, and the tax rate is 35% which is normally followed by the corporate houses. I have calculated the Cash flow of after tax of 5 years with the help of projected Cash flow.

Calculation of Cash flow after tax (CFAT)
Year 1 2 3 4 5 total
PBDT 55,000,000 62,000,000 70,000,000 77,000,000 77,000,000 341,000,000
Less Dep @20% 22,000,000 22,000,000 22,000,000 22,000,000 22,000,000 110,000,000
PBT 33,000,000 40,000,000 48,000,000 55,000,000 55,000,000 231,000,000
Less Tax @35 % 11,550,000 14,000,000 16,800,000 19,250,000 19,250,000 80,850,000
PAT 21,450,000 26,000,000 31,200,000 35,750,000 35,750,000 150,150,000
Add: Dep 22,000,000 22,000,000 22,000,000 22,000,000 22,000,000 110,000,000
CFAT 43,450,000 48,000,000 53,200,000 57,750,000 57,750,000 260,150,000
CCFAT 43,450,000 91,450,000 144,650,000 202,400,000 260,150,000 Calculation of Payback Period:
The Payback Period is the time required to recover the initial investment. It is important as it can evaluate the risk associated with a proposed project. An Investment with a shorter payback period is better.

The payback Period lies between 2 and 3 years.

Payback Period =Base Year + required CFAT/Next Year CFAT
=2+ 110,000,000-91,450,000/53,200,000
=2.35 years
Interpretation: In this Savlon Twinkle Baby Diaper Project, the payback period come out positive. We can recover the investment within a short period.
Calculation of Accounting Rate of Return (ARR):
ARR determines the percentage value with rate of benefit which an asset can generate over its lifetime. ARR measures the profitability of the investments. It is determined by the information taken from Financial Statements
ARR = (Average Annual PAT/Average Investment) * 100
= (30030000/55000000)*100
= 54.6%
Interpretation: The more ARR is preferable for a Project. The ARR of Savlon Twinkle Baby Diaper is 54.6 % which is good.

Calculation of Net Present Value (NPV) :
Net Present Value is the difference between the cash inflow and cash outflow in which the profitability of investment is measured.

Year Cash flows PV 12% PV of cash flows
0 110000000 1 110000000
1 43,450,000 0.893 38,800,850
2 48,000,000 0.797 38,256,000
3 53,200,000 0.7118 37,867,760
4 57,750,000 0.6355 36,700,125
5 57,750,000 0.5674 32,767,350
Total Cash flow 184,392,085
NPV 74,392,085

Interpretation: The NPV will be accepted if the cash inflow is greater than cash outflow. In this Project, The Cash Outflow was 11 crore whereas the cash inflow is 184,392,085. As the NPV of this Project came out Positive, The Project is accepted.
Therefore I increase the rate to decrease the Cash flow. So the new rate will be 15%
Year Cash flows PV 15% PV of cash flows
0 110000000 1 110000000
1 43,450,000 0.87 37,801,500
2 48,000,000 0.756 36,288,000
3 53,200,000 0.658 35,005,600
4 57,750,000 0.572 33,033,000
5 57,750,000 0.497 28,701,750
Total Cash flow 170,829,850
NPV 60,829,850
NPV=PV of Cash Inflow-PV of Cash Outflow
PV of Cash flow=12% =74,392,085
Pv of Cash Outflow=11 crore
Calculation of Internal Rate of Return (IRR) :
The interest rate which equates the PV of CF inflow with the PV of Outflow of a project is called as Internal Rate of Return.

IRR: = Ri + (PV of CF at Ri – PV of COF /PV of CF at Ri – PV of CF at Rh) * (Rh-Ri)
=12 + (184392085-110000000/184392085-170829850) * (15-12)
Interpretation: For the acceptance of a project, The IRR should be greater than the cost of capital. So I can say that, this Project is accepted as the IRR is higher than the Cost of Capital. The IRR of this project is 28.46% whereas; the cost of capital/ discount rate is 12%.
Profitability Index:
Profitability Index measures the Value of costs and value of benefits of a project. The PI helps in giving ranks to the projects on the basis of its value.

Profitability Index=PV of Cash Inflows / Initial Cash outlay
= 1.68 Times
Interpretation: The profitability index of this project is 1.68 which exceeds 1. If the PI exceeds 1 then the project will be accepted. So I can say that, this project is accepted as PI is greater than 1 value and the investment will be recovered within the short period of time.
Chapter -6
Findings, Suggestions ; Conclusion
The Savlon Twinkle Baby Diaper is generating CF for Five years. The initial investment of this project is 110000000.

Some points are observed from this capital Investment which is following:
The discounted payback period is 2.35 Years.

NPV and IRR are Positive.

The profitability index is greater than 1.

Suggestions and Recommendations
My some Suggestions regarding this project is following
In this project, The NPV and IRR are positive. The PI is also positive. This is risky project and the returns are high. The project is accepted.
Breakeven point Analysis:
A Break Even Point measures the safety zone of a company based on collected revenues and corresponding costs. The Profit will be zero in level of sales in breakeven point. Total Sales equals to total cost in breakeven point. If a company is unable to cover variable and fixed costs, it will have to bear losses.
The Calculation of Breakeven point ; the Income Statement regarding Savlon Twinkle Baby Diaper is given below:
Total Unit Percentage of Sales
Sales 9427464 60 100%
Less: Variable Expense 6750000 45 ?%
Contribution Margin 2677464 15 ?%
Less: Fixed Expense 1851300 Net operating income 826164 Sales = Variable expenses + Fixed expenses +Profit
60Q= 45Q + 1851300+ 0
Q=123420 units or at 60 per unit, 74,05200
Break Even Point Graph

1.8 Million Total Revenue
1.5 Million 1.2 Million
9 Million Breakeven point 123420 units Total Expenses 6 Million
3 Million Fixed Expense
Loss area
40k 80k 120k 160k 180k 200k 250k 300k
This Graph is representing the breakeven point of Savlon Twinkle Baby Diaper Project. X axis shows the Units, whereas Y Axis represents the Price. The Breakeven Point is 123420 units sold in which the price of Baby Diaper is 7405200. The Red Straight line Shows the Total Revenue and the blue one shows the Total Expenses.
Ahmed -Asif –


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