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Executive Summary:The Fly Ash Brick Project Case Highlights

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Executive Summary: The Fly Ash Brick Project Case highlights a project idea between two potential business partners Rajiv Sharma and Alok Gupta. Rajiv has had a business idea for a long time regarding the manufacturing of Fly Ash Bricks, a construction material made up of recycled coal residue and three other materials (Gypsum, Lime, and Sand). He has been doing market research on the feasibility for this venture, and as an important step of the process, he must calculate the financial risk and potential of this business plan. He is relying on a cost-volume-profit (CVP) analysis to determine if this project is a reality for him financially.
(Note - All values are in Indian Rupees - Rs.) 1. Analyze the various expenses into fixed
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These are costs that he will have to cover each month regardless of how many bricks the company is making or selling. They need to be budgeted for from the first month when they are just starting out, all the way through the life of the company.

Monthly Expenses – Fixed Cost, Admin Cost, Manufacturing Overhead
Building rent (FC)
50,000
Administrative Cost (AC)
10,000
Office Supply (MO)
5,000
Electricity (for lighting) (MO)
10,000
Miscellaneous (MO)
20,000
TOTAL
95,000

Variable expenses

Manufacturing companies almost always incur variable expenses. A big reason why is because to make products, you need raw materials. In this case we have Fly Ash (250,000), Gypsum (250,000), Lime (300,000) and Sand (40,000). Another variable expense will be Workers Labor (100,000) and Drivers (25,000). The workers will be working varying hours depending upon the production need. During busy times they might be working overtime, while in down times they could very well be asked to not come in for a day. This is all under the assumption that they are paid hourly and not on salary. If they were salaried it would be considered a fixed cost. The same goes with the drivers. They will be delivering the products on a demand basis. More trips when the company is busy and less when production is slow.
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