An Excellent Story of Success

Interpretation of study results

When you have a product or service then it becomes your episodes as an entrepreneur whether small or large business. Let's say that your business wants to make a profit of 5% -10%. What is the selling price to be determined? What is the cost of variable and fixed costs to use? Therefore, financial management needs to be carefully supervised. Record sales and purchase transactions and keep them perfectly so as not to affect the presentation.

E-commerce businesses have no manufacturing costs such as raw materials and semi-finished products. However, overhead costs such as electricity, telephones, water, internet, insurance, office rentals and direct employee wages will be assessed.

The method to analyze in business deals this time is to use mathematical application. The use of this mathematical formula is very popular. Known as a linear function and has been widely used by industries such as agriculture, manufacturing and transport.

Examples are as below;

TSRT Company sells A products

The variable cost (VC) is USD 1100.00

Spend a fixed cost equivalent to USD 20000

The selling price is USD 1200.00 per unit

The sales target of product A is 100 units

Total Revenue TR (x) = 1200x

Total Cost TC (x) = 1100x + 20000

Breaks even;
TR (x) = TC (x)
1200X = 1100x + 20000
100x = 20000
x = 200 units

Profit function formula
P (x) = TR (x) - TC (x)
= 1200x- (1100x + 20000)
= 100x - 20000
x = 200 units

The TSRT Company targets sales of product A is 100 units
P (x) = TR (x) - TC (x)
P (100) = 100 (100) - 20000
= 10000- 20000
= - 10,000

The TSRT Company suffered a loss of USD -10000 in its operations.

For those who want to start a business or small company such activity allows entrepreneurs to make informed decisions and strategist to achieve the target in the following years. If the profit and loss statements are presented then positive steps need to be implemented immediately. For example to reach a break point TSRT Company should sell 200 units. If more than 200 units are sold then TSRT will generate profit. The decision will be made based on various factors. The determining factor is not just the selling price and the costs incurred but there are various situations to be refined.

So how to keep business going? And how to increase revenue through sales?