1

Company Overview
Our company name is FRUITCY. It is situated in savar and maintained by some trained people in
an organized manner.
Nature of Business
We form our business as a Partnership business. The types of our business are Manufacturing
Juices, Distribution/Wholesaler.
Business Description
Our business name is Fruitcy and we have different varieties in juices drinks as well and our
Fruitcy Industry is located in Asulia, Savar, Dhaka.
Management plan
The company's management philosophy will be based on responsibility and mutual respect. Our
management style reflects the participation of the owners; we are not very hierarchical, and
encourage all employees to learn as much as possible about all aspects of the business. Fruitcy
has a very strong organizational culture. It believes on teamwork. The main goal will be of our
management team, to manage the organization effectively and efficiently to continue the
business enterprise.
Share of partners and positions
Sumaiya Afroz the Chairman of Juice Company and have 30% of share. Selected by the all
partners of the company, who actually give the command over the invention and control all the
departments. All the business partners and personnels are responsible to perform the duties as
the chairmen stated. Her main responsibility is to maintain the suppliers to ensure the
continuity of good relations to them. The Head of the company who actually control &
implement all partners idea about the business. It means an individual developing something
unique. Its behaves is that:

Initiative taking.
The acceptance of risk or failure.

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Shakila Alam is our Head of Production, and h a v e 2 0 % o f s h a r e , she has a
complete and strong command over Operational management and Production Analysis.
Production manager mainly responsibility is that describe the physical plant layout, the
machinery and equipment needed to Perform manufacturing operation; raw materials and
suppliers names, address and terms, cost of manufacturing. A production manager
allocates the raw materials from different suppliers to produce the final products. The
responsibilities are

Purchasing the all staff of food with better quality from food market.
Responsible for all the operations withi n the shops (cleanness, quality of food, timely

delivery to the customer).

Responsible all the food expenses recodes.
Managing Labor & controlling the production system.
Motivating the labors & making the reward opportunities.

Roksana Ferdous our head of marketing, cause she has completed her graduation on
Marketing major and she has good command over marketing and also have 25% of
share. The main responsibilities are:

Focus on the Customer.

Monitor the competitor.
Own brand.
Find and direct outside vendor.
Generate new idea.
Communicate internally.
Manage the budget.
Understand the ROI.
Set the Strategy, Plan the Attack, and Execute.

Zaharatul Munir Sarah, our Head of financial manager and planner and has a 15% of share,
she has a great command over finance because she has an educational and financial management
background. The Responsibilities are:

Accounts payable.
Accounts receivable.
Audit.
Budgeting.
Cash receipts.
Fixed assets.
Pay roll
Utility billing

Mahbuba-Tuz-Zuhura., our head of planning and performance management and has 10% of
share and she have the strength to take decision and maintain the companys performance.
The responsibilities are:

Staff induction.
Reward and recognition.
Staff retention.
Management development and career development.
Succession planning.
Competency building and mapping.
To recommend and ensure implementation of strategic directions for people development

within the organization.

Salary letters and employment contracts.

Apart from that, we have 12 workers and to supervise them we have 2 supervisor.

Company Organogram

Head
Production
Head of
of Production
& Operation

Head of Marketing

CEO
CEO of
of Production
Production
& Operation

Executive of
Production
Production
Management
Management

Officer
Officer

Executive
Executive of
of
Production
Production
Planning

Officer
Officer

Executive
Executive Officer
Officer
of Sales &
Distriution

Officer

Executive Officer
of Market Analysis
&Planning
&Planning

Officer

CEO of Marketing

Chairman
Chairman
Cashier
Cashier
Head of Finance

CEO of Finance

Executive of
Accounts
Auditor

Head of Planning
&
Performance
& Performance
Management
Management

CEO of Planning &

Performance
Performance
Management
Management

Human
Resource
Human Resource
Manager
Manager

Officer

Production
Production CoCoordinator

Officer
Officer

Area of operation
We are new in business and thus we have planned to focus on only the domestic market. Our
initial target is to cover the Dhaka and Rajshahi division and offer Fruitcy to the people of these
divisions. In future, our target will be the whole country.
Target Customer
Our target customer is children and diabetic and health conscious people of our country.

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Product & Services
Why Fruitcy

Fruitcy is especially for the children and diabetic people because it is a sugar free and diet
juice. Fruitcy is also providing the totally fresh juices. People are very much conscious
about their health and mostly people are like the fresh food rather than the Soda, Carbonated
drinks. It will be also favorable for children and health conscious people.
Fresh Juices
For the first time we are producing orange juice for testing the consumer market.

We are going to make fresh juices 3 flavors in juices available throughout the year Orange, mango and Cocktail special.
Seasonal Juice
In seasonal juices we initially introduced Mango, Orange.
Our specialty
We reduce the fat level on 0.5% and add extra vitamins and add some sugar that is best for
diabetic people.

100% pure juice

Pure sugar free
Diet
Mixed flavor (cocktail)

Size of the business

This business will produce & provide consumer product and organize medium size business.
Initially we will cover the 2 division of the country but our prospect will be whole of the
country.
Cost Classification:
Product Cost: It will include all costs involved in acquiring or making a product. Under product
cost, we have direct material, direct labor and manufacturing overhead.
Direct material cost:
Inventory
Raw materials
Work in process
Finished goods

Beginning (Tk.)
500000
300000
369000

Ending (Tk.)
700000
400000
492000

Taka
500000
13700000
14200000
700000

Total Taka

Our initial direct material used in production:

Purchase of direct materials
Beginning raw materials
Add: Purchases of raw materials (Fruits & Bottle)
Raw materials available for production
Less: Ending raw materials
Total raw materials used in production

13500000

Direct Labor cost:

We have 120 labors that are directly involved in producing juice.
Total Working

Wage rate per

No. of day per

hour per day

8

hour
Tk. 84.64

month
24

Total cost per labor

For 120 labor

Tk. 16250

Tk. 1950000

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Manufacturing overhead:
Item
Indirect material
Indirect labor
Factory insurance
Maintenance and repair
Building rent
Depreciation Machine & Equipment
Total

Cost
400000
100000
100000
200000
1600000
163000
1500000

Period Cost:
Item
Salary of executives
Advertising expenses
Depreciation Office equipment
Delivery expenses (Per bottle @ Tk. 4)
Miscellaneous expenses (Fixed Tk. 50000 + @ Tk. 3 Per unit)
Total

Cost
460000
1290000
150000
596000
497000
2993000

Main Cost
Our main cost is direct materials & direct labor. And our per unit direct material cost is Tk. 90
and per unit direct labor is Tk. 13

Details
Direct materials:
Beginning Raw Materials
Add: Purchase of Raw Materials
Raw Materials Available for Production
Less: Ending Raw Materials
Raw Materials Used in Production
Direct Labor
Prime Cost

Taka

Taka

500,000
13,700,000
14,200,000
700,000

13,500,000
1,950,000
15,450,000

Cost Behavior
Monthly Production & Cost Schedule of Fruitcy Ltd.
Month
January
February
March
April
May
June
July
August
September
October
November
December
Total

Units
12,00
0
9,20
0
14,30
0
14,60
0
12,50
0
12,10
0
13,40
0
10,20
0
12,70
0
16,40
0
10,50
0
12,10
0
150,00
0

Costs

1,722,500
1,358,50
0
2,021,50
0
2,060,50
0
1,787,50
0
1,735,50
0
1,904,50
0
1,488,50
0
1,813,50
0
2,294,50
0
1,527,50
0
1,735,50
0
21,450,00
0

Estimation of the fixed and variable components of monthly expenses by using high-low
method:

The first step in the high-low method is to identify the periods of the lowest and highest
activity. Those periods are February (9200 Units Produced) and October (16400 Units
Produced).

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The second step is to compute the variable cost per unit using those two data points:
Month

Produced Units

High Activity Level (October)

16400

Low Activity Level (February)

9200

Change

7200

Variable Cost

Production Cost

2,294,500
1,358,50
0

936,000

Change in Cost
Change in Activity

Tk. 936000
7200 Units

= Tk. 130 Per unit

The third step is to compute the fixed cost element by deducting the variable cost element
from the total cost at either the high or low activity. In the computation below, the high point
of activity is used:
Fixed Cost Element

The cost formula is:

=
=

Tk. 2294500 - (Tk. 130 Per Unit x 16400 Units)

Tk. 162500 Per Month
Y = Tk. 162500 + Tk. 130X

Variable Costing
Compute the unit production cost under absorption costing
method:

Direct materials
Direct labor
Variable manufacturing overhead
Fixed manufacturing overhead
Absorption costing unit production cost

Unit Cost
90
13
3
17
123

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Compute the unit production cost under variable costing

method:
Unit Cost
90
13
3
106

Direct materials
Direct labor
Variable manufacturing overhead
Variable costing unit production cost

Setting Per Unit Selling Price

The total variable cost per unit can be computed as
flows:
Tk. 19370000 / 149000 Units = Tk. 130 Per
bottle
The fixed cost per unit can be computed as flows:
Total fixed cost /
=
Total activity
= Tk. 1950,000 / 150000 Units = Tk. 13
Cost Per Unit:
Variable Cost
Fixed Cost

Total Cost Per Unit

Per unit selling price

Taka
130

= Per Unit Cost + Expected Profit

= Tk. 143 + (143 * .14)
= Tk. 163 Per Unit

Note: Here Expected profit is 14% on per unit total cost.

13
143

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CVP
Fruitcy Ltd. is a reputed juice maker company in Bangladesh. The companys contribution
format income statement is given below:
Details
Sales (149000 Units x @ $163)
Variable Expenses
Contribution Margin
Fixed Expenses
Net Operating Income

Total

24,287,000

Per Unit

163

19,370,000

130

33.00

4,917,000
1,950,000

2,967,000

The CEO asked to the Accounts & Finance Director to solve

this:
1) Compute the company's CM ration and Variable
expenses ratio.
2) Compute the company's break-even point in both units and sales dollars.
3) Assume that next year management wants the company to earn a profit of at least Tk.
3500,000. How many units will have to be sold to meet this target profit?
4) Compute the company's margin of safety in both dollar and percentage
form.

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Solution to CEO:
Requirement 1:
CM Ratio

Variable Expense Ratio

Unit Contribution Margin

Unit Selling Price

$33
$163

Variable Expense
Unit Selling Price

$130
$163

20.25%

79.75%

59091
Units

Requirement 2:
Break-even Point in Units

Fixed Expenses
Unit Contribution Margin

1950000
33

Break-even Point in Dollars

BEP in Units x Unit Selling Price

=

59091 Units x Tk. 163

=
9,631,833
Requirement 3:
Target Profit (Equation method):
Target Profit

= Unit CM X Q - Fixed Expenses

> Tk. 3500,000 = Tk. 33 x Q - Tk. 1950,000

> Tk. 33Q
>Q

= Tk. 3500,000 + Tk. 1950,000

= Tk. 5450,000 / Tk. 33

= 165152 Units

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Requirement 4:
Margin of Safety in dollars

Total Sales - Break-even

Sales
Tk. 24287,000 - Tk.
= 9631,833

Margin of Safety Percentage

4,655,167

Margin of safety in dollars

Total Sales

14,655,167
=

4,287,000
=

60%

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Cost of Goods Manufactured

Fruitcy Ltd.
Schedule of Cost of Goods Manufactured
For the Year Ended December 31, 2014
Details
Direct materials:
Beginning Raw Materials
Add: Purchase of Raw Materials
Raw Materials Available for Production
Less: Ending Raw Materials
Raw Materials Used in Production
Direct Labor
Prime Cost
Manufacturing Overhead:
Indirect materials
Indirect labor
Factory rent
Factory insurance
Maintenance & repair
Depreciation - Machine & Equipment
Total manufacturing overhead
Total Manufacturing Cost
Add: Work in Process, Beginning
Total Work in Process
Less: Work in Process, Ending
Cost of Goods Manufactured

Taka

Taka

500,000
13,700,000
14,200,000
700,000
13,500,000
1,950,000
15,450,000

400,000
100,000
1,600,000
100,000
200,000
700,000

Note: Per Unit Production Cost ($18430000 / 1500000 Units)

3,100,000
18,550,000
300,000
18,850,000
400,000
18,450,000

123

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Income Statement
Fruitcy Ltd.
Income Statement (Contribution Format)
For the year ended December 31, 2014
Details
Sales (149000 Units x $163)
Variable Expenses:
Cost of Goods Sold (149000 Units x Tk. 123)
Delivery expenses (149000 Units x Tk. 4)
Miscellaneous expenses (149000 Units x Tk. 3)
Total Variable Expenses
Contribution Margin
Fixed Expenses:
Executive salaries
Depreciation expenses - Office Equipment
Advertising expenses
Miscellaneous expenses
Total Fixed Expenses
Net Operating Income

Taka

Taka
24,287,000

18,327,000
596,000
447,000
19,370,000
4,917,000

460,000
150,000
1,290,000
50,000

1,950,000
2,967,000