Module: Business Analytic Assignment Sample

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Introduction Of The Preparation Of A Mathematical Model Is Deemed To Be A Vital Parameter For Instigating The Proper Budgetary And Financial Projections For An Organisation Assignment

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Kilburn Farms Ltd.

 Mathematical Model

The preparation of a mathematical model is deemed to be a vital parameter for instigating the proper budgetary and financial projections for an organisation. In order to successfully prepare a mathematical modelling, major components required to be adhered to by an organisation consists of the parameters including sales revenue, fixed and variable costs and the contribution margin. As per narrations and explanations of Freking et al. (2020), the preparation of a mathematical model usually follows the marginal costing approach, which is deemed to be an alternative branch of accounting. Following is the detailed synopsis and mathematical modelling prepared to enable Mr. Matthew a detailed understanding of how profitability is affected when exposed to various organisational scenarios. In order to prepare the mathematical model, five possible scenarios have been considered concerning all the above-detailed parameters.

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Mathematical Modelling for KF Ltd.



Annual Output

Variable Cost Per Unit

Selling Price Per Unit

Total Variable Costs

Total Selling Price


Fixed Costs

Net Profit

Total Costs

Budgeted Figures


 £ 0.90

 £ 3.00

 £ 1,80,000.00

 £ 6,00,000.00


Decrease in Output 1 by 10%


 £ 0.90

 £ 3.00

 £ 1,62,000.00

 £ 5,40,000.00


Increase in Output by 10%


 £ 0.90

 £ 3.00

 £ 1,98,000.00

 £ 6,60,000.00


Increase in Variable costs, Decrease in Selling Price by 10%


 £ 0.99

 £ 2.70

 £ 1,98,000.00

 £ 5,40,000.00


Increase in Variable Costs and Selling Price by 5%


 £ 1.04

 £ 3.15

 £ 2,07,900.00

 £ 6,30,000.00


Increase in Selling Prices by 8%, Increase in Variable Costs by 15%


 £ 1.20

 £ 3.24

 £ 2,39,085.00

 £ 6,48,000.00

Contribution Margin for Scenario 1

 £ 3,78,000.00

Contribution Margin for Scenario 2

 £ 4,62,000.00

Contribution Margin for Scenario 3

 £ 3,42,000.00

Contribution Margin for Scenario 4

 £ 4,22,100.00

Contribution Margin for Scenario 5

 £ 4,08,915.00

Fixed Costs for Scenario 1

 £ 1,00,000.00

Fixed Costs for Scenario 2

 £ 1,00,000.00

Fixed Costs for Scenario 3

 £ 1,00,000.00

Fixed Costs for Scenario 4

 £ 1,00,000.00

Fixed Costs for Scenario 5

 £ 1,00,000.00

Net Profits for Scenario 1

 £ 2,78,000.00

Net Profits for Scenario 2

 £ 3,62,000.00

Net Profits for Scenario 3

 £ 2,42,000.00

Net Profits for Scenario 4

 £ 3,22,100.00

Net Profits for Scenario 5

 £ 3,08,915.00

Total Costs for Scenario 1


Total Costs for Scenario 2


Total Costs for Scenario 3


Total Costs for Scenario 4


Total Costs for Scenario 5


Table 1: Mathematical Modelling Projection for KF Ltd.

(Source: Created by Learner)

As per the above-determined mathematical modelling, it can be viewed that the highest achievable net profit is deemed to be in Scenario 2, whereas the lowest net profit is expected to be in situation 1. Hence, an increase in variable costs leads to a reduction in the overall profitability scenario and necessary actions are needed to be undertaken to optimise the production process at daily activity levels.

 Calculation of Profit or Loss of KB Ltd.



Per Unit Cost/ Price

Annual Demand or Output

Total Value

Sales Revenues

 £ 3.00


 £ 6,00,000.00

Variable Costs

 £ 0.90


 £ 1,80,000.00

Contribution Margin

 £ 2.10


 £ 4,20,000.00

Fixed Costs

 £ 1,00,000.00


 £ 3,20,000.00

Table 2: Profitability Projection for KF Ltd.

(Source: Created by Learner)

As per the above determined tabulated formulation of mathematical modelling, the expected profitability achieved from regular course of business activities is considered to be £ 320,000. In order to successfully calculate the figures of profitability, adherence has been further provided to incorporate essential financial elements. As per opinions and views of Basto, Chahal and Riedel (2019), the essential financial elements further consist of sales revenues, variable costs, fixed costs and the contribution margin.

 Five Year Projection

The significance and importance of a five year projection plan are further deemed to be an important organisational consideration to uphold utmost financial integrity in the normal business activity courses. In order to facilitate the preparation of a viable five year projection plan, the following table has been demonstrated outlining the various modulations and changes expected in overall selling price, outputs budgeted and the expected variable costs.

Five Year Projection Table




Variable Cost per unit

Selling Price per unit

Total Variable Cost

Total Selling Price


Increase in Total Output by 10%


 £ 0.95

 £ 3.15

 £ 2,09,880.00

 £ 6,93,000.00

Increase in Variable Costs by 6%

Increase in Selling Price by 5%


Increase in Total Output by 10%


 £ 1.01

 £ 3.31

 £ 2,44,720.08

 £ 8,00,415.00

Increase in Variable Costs by 6%

Increase in Selling Price by 5%


Increase in Total Output by 10%


 £ 1.07

 £ 3.47

 £ 2,85,343.61

 £ 9,24,479.33

Increase in Variable Costs by 6%

Increase in Selling Price by 5%


Increase in Total Output by 10%


 £ 1.14

 £ 3.65

 £ 3,32,710.65

 £ 10,67,773.62

Increase in Variable Costs by 6%

Increase in Selling Price by 5%


Increase in Total Output by 10%


 £ 1.20

 £ 3.83

 £ 3,87,940.62

 £ 12,33,278.53

Increase in Variable Costs by 6%

Increase in Selling Price by 5%

Table 3: Five Year Projection for KF Ltd.

(Source: Created by Learner)

As per the above demonstrated tabulation of the five year projection for KF Ltd. an overall increase of 5% is expected uniformly from 2023-2027. This is further demonstrated by the following charting and graphical visualisation applicable to KF Ltd.

Five Year Projection Chart

(Source: Created by Learner)

Critical Analysis and Comment on Costing and Revenue behaviour

Aspects of costing and revenue are often deemed to be vital metrics for an organisation to determine long-term financially strong prospects. In order to determine a viable pathway for storing financial credentials, adherence to following appropriate costing and revenue measures is further deemed to be vital to develop a sustainable competitive advantage. The costing behaviour associated with KB Ltd. can be further segregated based on pre and post projection phases. As per the pre-projection phases, the behaviour of costs and revenues was considered to be irregular, where a higher increase in costs usually depicted lower profitability prospects for the company, However, after including the projection charts and mathematical modelling tables, the perception of costs and revenue behaviour has changed drastically. The changes in costs and revenues after considering the projection phases are deemed to be more streamlined and harmonised. Hence, a direct relationship is established, wherein a rise in variable costs also leads to revenues, thereby altering the profitability prospects by minimal margins (Rakotondrajoa et al. 2020). 

Cost and revenue behaviour in the general parlance is also deemed to be key economic factors associated with the proper functioning of industries and their respective organisations. As per narrations and explanations of Regenstein et al. (2018), a decrease in costs is often required to be nullified as its probability of occurrence remains rare. Hence, the critical aspects of costing behaviour can be associated with consideration of a decline in costs, which usually does not take place. The additional critical aspect of the costing approach in common parlance can be associated with partial exclusion of economic factors. Key economic factors and indices including GDP, inflation and unemployment are often neglected to ascertain the actual costing required to be installed by an organisation concerning a particular product or commodity. The adherence to sales revenues is additionally considered to be a vital factor in association with the costing parameters.

However, the critical aspects of sales revenues also co-exist in accordance with the costing structure employed by organisations. Welton, Jenkins and Perraillon (2018), critically expressed and narrated that the primary critique associated with sales revenues consists of the non-adherence of organisations to incorporate the possibility of contingency events. Contingency events are often deemed to be instrumental parameters, which affect the sales revenue of an organisation in the foreseeable future. The happening or likeliness of a contingent event depends upon the gravity of the organisational situation with respect to how it reacts to certain corporate threats and vulnerabilities. Lower sales values often possess negative implications, where it reduces the organisational profitability as well as lead to decreased investor orientation in the market and industry (Galassi, 2020).

Wash-Well Limited

Calculation of Correlation Coefficient

The calculation of correlation coefficient is deemed to be a significant statistical parameter to identify the level or degree of interdependency existing between two or multiple variables. As explained and stated by Sung (2021), the importance of correlation is further magnified when financial indicators are considered by an organisation to facilitate requisite business aesthetics. In order to express the appropriate statistical measures and financial prowess of Wash-Well Limited variables concerned for the correlation statistics are considered to be advertising expenditure and sales revenues. Following is the suitable expression and calculation of the correlation statistics for Well-Wash Limited concerning the selected variables.

<table ">


Advertising Expenditure (X) (000)

Sales Revenue (Y) (000)


 £ 2.00

 £ 100.00


 £ 5.00

 £ 70.00


 £ 4.00

 £ 90.00


 £ 6.00

 £ 60.00


 £ 3.00

 £ 80.00


Correlation Coefficient


 Calculation of Correlation Statistics for KF Ltd.

(Source: Created by Learner)

As per the above displayed tabulated demonstration of the correlation existing between advertising expenditure (X) and sales revenue, the correlation has been calculated as -0.9. The relevance and significance of a negative correlation further imply zero correlation existing between the variables. As per views and observations of Walsh (2019), characteristics of a negative correlation further determine that when values of a particular variable change, it possesses no changes in the values of the other variable. Hence, it can be deemed that changes in the values of advertising expenditure do not usually reflect large-scale valuation changes in the independent variable (Y). Further discussion on the scatter diagram of the variables associated with this data and identification of the pattern of the relationships is mentioned as follows.

Scatter Diagram

 Scatter Diagram for determining the relationship between advertising expenditure and sales revenues

(Source: Created by Learner)

As per the above determined scatter diagram for determining the relationship between advertising expenditure and sales revenue further demonstrates a linear progression of the two variables. According to the above graphical visualisation, it can be observed that linear expression of advertising expenditure is mostly static with minuscule changes occurring in the yearly advertising expenditures. However, in relation to the charting of advertising expenditure, the sales revenue chart determines different propositions to facilitate a crucial financial attribute for the organisation. As per the chart, the movement in sales revenues linear expression is deemed to be fluctuating over five years. Hence, a decline and rise pattern is observed for the sales revenues, where the company expects to obtain indifferent sales propositions in the near foreseeable future. Stewart (2019), expressed and believed that this could mainly occur due to the company following a conservatism concept or considering adding contingency events in the mix to ascertain expected sales figures in the near future.

As per narrations and explanations of Youssof, Saleh and Ahmad (2021), periodic and methodical changes in the sales revenue projection of an organisation are deemed to be favourable in line with the industry practices. The main ideology associated with deeming the movement in charts as favourable can be aptly based on considering future potential financial mishaps. The onset of covid-19 pandemic has aggravated fruitful business prospects all around the globe and consideration of minimised sales revenue in the near future is deemed relevant and rational. The scatter diagram is considered to be a useful statistical parameter that can be emphasised by a company in the near future to identify what necessary actions are needed to be undertaken for encouraging streamlined growth in sales revenues. The streamlined growth in sales revenues can be further integrated and carried forward to achieve maximised profitability prospects, thereby enabling Well-Wash Limited to ascertain a strong business foothold and an incremental competitive advantage.

Critical Analysis of Advertising expenditure impact

The adherence to financial and non-financial constraints by an organisation is deemed to be a vital factor of consideration to propagate favourable long-term business propositions in the near and distant future. In order to ascertain the adherence to financial and non-financial aspects of an organisation, the importance of complying with budgeted advertising expenditure and sales revenues is deemed crucial for achieving destined organisational goals, objectives and milestones. Further discussion on the potential impacts of advertising expenditure and sales revenues are discussed as follows.

i) Impacts of Advertising Expenditure

The primary impacts of advertising expenditure can be considered with respect to a business organisation losing its industry stronghold to entertain long-term sustainability prospects. Bara et al. (2021), critically expressed and viewed that higher advertising expenditure as compared to the budgeted advertising expenditure is deemed to be a body blow, which further shrinks the organisation's ability to maximise profit maximisation abilities in the industry and the markets. The second impact of advertising expenditure can be associated with the organisation needing to hire an additional amount of advertising professionals, experts and staff. Chu, Kamal and Kim (2019), critically narrated and idealised that human resources or the manpower of an organisation further becomes unstable as a higher time is needed to be focussed by the organisation towards facilitating quality recruitments. Hence, a higher time on recruitment usually narrows the organisations availability to generate higher sales revenues in the regular business activities in the industry. Further discussion on the impacts of sales revenues for organisations is detailed as follows.

) Impacts on Sales Revenues

The impact of sales revenues is further deemed to be essential in accordance with advertising expenditure and is deemed to be an essential financial parameter to facilitate the apt monetary aesthetics. However, potential impacts of sales revenues cannot be ruled out and rigorous tactical implementations and action plans are needed to be facilitated to cater to favourable financial harmony in the near foreseeable future. As critically expressed, and observed by Coates et al. (2019), primary impact of sales revenues can be considered based on effects catapulted by marketing channels, pricing and inventory strategies. Hence, a lower sales revenue projection or the occurrence of lower sales value as compared to the budgeted sales value is deemed to be a vitriolic organisational situation. This can further compound to minimised orientation from external stakeholders including government and investors to cater to favourable business prospects for an organisation.

 In order to potentially minimise and nullify the impacts of advertising expenditure and sales revenues, it is advised to the marketing manager of Well-Wash limited to apply a mixture of various marketing tactics. Various marketing tactics that could be fruitfully implemented by Well-Wash Limited consist of following the 5P tactic, where the company can focus on facilitating services for a particular line of a product at specific and targeted locations. In this manner, a detailed business competitive advantage can be achieved, thereby facilitating favourable long-term propositions for Well-Wash Ltd in the detergent industry.

 Basu Plc.

Calculations of Break Even Point and Margin of Safety

 Break Even Point

The break-even point is often deemed to be a vital financial indicator that usually adopts a marginal costing approach to facilitate accurate projection of costs and relevant revenues. As per narrations and illustrations of Woolf and Johnson (2020), the break-even point is deemed to be a situation where a company anticipates recovering its fixed costs and variable costs with respect to the total sales revenues generated. Hence, the relevance of break even in the modern corporal structure is essential especially for a new company to determine how many selling units are needed to be generated to at least recover the essential costs. Following is the detailed calculation of breakeven point for Basu Ltd. with respect to adherence being shown in including sales, variable costs and fixed costs.


Per Unit Cost/Price



Selling Cost Per Software

 £ 600.00

Total Software’s Budgeted to be Sold


Total Budgeted Sales Value

 £ 3,84,000.00

Variable Cost Per Unit

 £ 250.00

Total Variable Costs

 £ 1,60,000.00

Contribution Margin

 £ 350.00

 £ 2,24,000.00

Anticipated Fixed Costs of Administration

 £ 60,000.00

Anticipated Fixed Costs for Sales

 £ 80,000.00

Total Fixed Costs

 £ 1,40,000.00


 £ 84,000.00

Breakeven Point (Units)

(Fixed Costs/ Contribution per Unit)


Table 5: Calculation of Breakeven Point for Basu Ltd.

(Source: Created by Learner)

As per the above tabulated demonstration of break-even point, Basu Ltd. requires to sell 400 units for recovering its associated costs. The formula applied for calculating the breakeven point is proportionate fixed costs with contribution margin per unit. Further calculation and discussion on the margin of safety are determined as follows.

ii) Margin of Safety

In addition to the break even point, adherence to a margin of safety is also coined to be an important marginal costing parameter for organisations. Pamungkas and Irawan (2021), expressed and idealised that margin of safety determines a feasible profitability zone for an organisation, where it can expect a proportionate amount of profitability in the due course. Following is the calculated expression of margin of safety for Basu Ltd.


Margin of Safety

Breakeven Sales


Budgeted Sales Units


Margin of Safety (Current Sales- Breakeven Sales)/ Current Sales


Table 6: Calculation of Margin of Safety for Basu Ltd.

(Source: Created by Learner)

According to the above table of margin of safety, it can be determined that the numerical expression of MOS is considered to be 37.5%. In order to successfully calculate the MOS, the formula applied consists of proportioning difference between sales and break even sales with respect to current sales levels of Basu Ltd.

 Discussion on Targeted Profitability

In addition to the calculations provided for break even point and margin of safety, the values of identified profitability are also deemed to be vital financial indicators for Basu Ltd. According to the above break-even calculation table, it can be witnessed that the profitability for the organisation has been calculated as £84,000, wherein the targeted profit is considered to be £ 56,000. Hence, the company has overachieved its targeted profitability by around 50% and the estimated sales volume is more than sufficient to achieve this target of £ 56,000. Akbar, Agustin and Antasari (2022), explained and observed that major reasons for exceeding targeted profitability can be attributed to better financial planning, optimisation of cost centres and maximisation of the revenue generation streams.

 Preparation of a Break Even Chart

Breakeven Chart






 £ 3,84,000.00



 £ 2,24,000.00

Breakeven Point


Margin of Safety


 Break Even Chart

(Source: Created by Learner)

The preparation of a breakeven chart is further deemed to be a vital organisational aspect for Basu Ltd. to identify its expected future performance. In association with the break even point, the margin of safety has also been included to define the core crux of charting.

 Break Even and Margin of Safety Chart

(Source: Created by Learner)

Critical Analysis of benefits and limitations of Break Even Point

The critical analysis of advantages and loopholes of break even point remains to be a distinctive challenge for organisations to justify financial excellence in the near and distant future. Following is a detailed investigation of the various benefits and disadvantages possessed by the breakeven model in common financial parlance.

 Benefits of Break Even Point

The primary benefits associated with the preparation and determination of a break even point can be associated with aptly identifying how much profitability can be expected by an organisation, with adherence to sales and relevant costs. Moreover, the benefits of break even point can be considered as allowing an organisation to understand how much output is needed to be generated to cater to favourable long-term business prospects. As narrated and explained by Wahyuni, Yulinda and Bathara (2020), break-even point also allows organisations to set a marker regarding the implementation of a particular budget. Various forms of available budget consist of zero-based budgeting and activity-based budgeting, where a suitable application of a particular budget usually attracts better long-term business prospects. Simultaneous modifications and amendments can be further facilitated by organisations to meet their stipulated goals and objectives. Break even is also considered to be an important tool for Basu Ltd. as future revenue generation projections can be further facilitated by the company.

 Limitations of Break Even Point

In addition to the advantages possessed by the suitable determination of a break even point and model, limitations are further considered to be worrying financial parameters for an organisation. As critically expressed and opined by Worang, Pelleng and Tarore (2018), the primary limitations of a break even point or model can be associated with not precisely determining the fundamental structure of cost division. Hence, critical nuances and costing elements are often misinterpreted leading to indifferent financial results for the organisation. Further disadvantages of the break even model can be considered as possessing indifferent variability in fixed cost figures when inputs are changed or altered. This mostly happens due to fluctuating output of contribution margin, variable costs and selling costs. Another disadvantage associated with the breakeven analysis can be considered as taking a higher time consideration to aptly employ a suitable budgetary selection concerning available organisational resources.


Akbar, F., Agustin, B.H. and Antasari, D.W., 2022. Analisis Break Even Point Sebagai Dasar Dalam Menyusun Anggaran Penjualan Dan Perencanaan Laba (Studi Kasus pada Pabrik Rokok Semanggi Mas Tulungagung). Jurnal Ilmiah Cendekia Akuntansi7(3), pp.42-56.

Bara, A., Affandi, F., Farid, A.S. and Marzuki, D.I., 2021. The Effectiveness of Advertising Marketing in Print Media during the Covid 19 Pandemic in the Mandailing Natal Region. Budapest International Research and Critics Institute-Journal (BIRCI-Journal) Vol4(1), pp.879-886.

Basto, J., Chahal, R. and Riedel, B., 2019, September. Time-driven activity-based costing to model the utility of parallel induction redesign in high-turnover operating lists. In Healthcare (Vol. 7, No. 3, p. 100355). Elsevier.

Chu, S.C., Kamal, S. and Kim, Y., 2019. Re-examining of consumers’ responses toward social media advertising and purchase intention toward luxury products from 2013 to 2018: A retrospective commentary. Journal of Global Fashion Marketing10(1), pp.81-92.

Coates, A.E., Hardman, C.A., Halford, J.C.G., Christiansen, P. and Boyland, E.J., 2019. The effect of influencer marketing of food and a “protective” advertising disclosure on children's food intake. Pediatric obesity14(10), p.e12540.

Freking, W., Okelana, B., McMillan, L.J., Kibble, K., Parikh, H.R. and Cunningham, B.P., 2020. Can Reducing Implant Costs Increase Revenue for Surgically Treated Ankle Fractures: Time Driven Activity Based Costing for 1 year Episode of Care. Foot & Ankle Orthopaedics5(4), p.2473011420S00220.

Galassi, G., 2020. Economic income, historical costing income and conservatism. An integrated approach. De Computis: Revista Española de Historia de la Contabilidad17(2), pp.28-42.

Pamungkas, I. and Irawan, H.T., 2021. Analisis Break-Even Point pada Usaha Produksi Minyak Nilam di Kabupaten Aceh Selatan. Journal Industrial Servicess6(2), pp.112-116.

Rakotondrajoa, P., Rakotomamonjy, T., Baptiste, R.J., Demers, L., Kileo, P., Anholt, M., Aghajanian, J. and Bassett, K., 2020. Achieving self-sustainability of service delivery in an eye care program in Madagascar using time-driven activity based costing. BMC health services research20(1), pp.1-9.

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Stewart, D.W., 2019. The Accountability Crisis In Advertising and Marketing: Self-Regulation and Deeper Metrics Are Needed to Survive the Digital Age. Journal of Advertising Research59(4), pp.385-390.

Sung, E.C., 2021. The effects of augmented reality mobile app advertising: Viral marketing via shared social experience. Journal of Business Research122, pp.75-87.

Wahyuni, R.D., Yulinda, E. and Bathara, L., 2020. Analisis Break Even Point dan Risiko Usaha Pembesaran Ikan Nila (Oreochromis niloticus) dalam Keramba Jaring Apung (KJA) di Desa Pulau Terap Kecamatan Kuok Kabupaten Kampar Provinsi Riau. Jurnal Sosial Ekonomi Pesisir1(1), pp.22-33.

Walsh, C., 2019. The advertising and marketing of consumer goods in eighteenth-century London. In Advertising and the European City (pp. 79-95). Routledge.

Welton, J.M., Jenkins, P. and Perraillon, M.C., 2018. A micro-costing or'bottom-up'approach to measuring nursing costs using data from electronic health records. Nursing Economics36(1), pp.46-50.

Woolf, S.H. and Johnson, R.E., 2020. The break-even point: when medical advances are less important than improving the fidelity with which they are delivered. The Annals of Family Medicine3(6), pp.545-552.

Worang, C.G., Pelleng, F.A. and Tarore, H.S., 2018. Analisis Break Even Point Terhadap Produksi Ayam Petelur Pada UD. Kakaskasen Indah. Jurnal Administrasi Bisnis (Jab)7(001), pp.58-65.

Yussof, F.M., Salleh, S.M. and Ahmad, A.L., 2019. Augmented reality: a systematic literature review and prospects for future research in marketing and advertising communication. Intelligent and Interactive Computing, pp.459-473.

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