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Back to Newsletter Vol 2, Issue 04, Nov 2020
Finance
After successfully completing one and half years of production and distribution of Solar LED lanterns of three categories, Anirudh wanted to determine the profitability from the manufacture and sale of each category. The case study provides scope to evaluate and understand the various cost components and their role in determining profitability.

CVP Analysis - Profitability Assessment and Production Planning
Rameshwar started a High-density polyethylene (HDPE) moulded bucket manufacturing unit in the month of April 2019. He was successful in producing and selling around 130,000 units of the 21 liter capacity HDPE moulded bucket (Product-1) within the first seven months of launching commercial business operations. Rameshwar found that there was high demand for 18 liter HDPE buckets and planned to manufacture these too (Product-2) simultaneously. However, the dilemma he faced was what sales mix he should adopt to get the maximum profit.

Optimization of Sales Mix - Evaluation of Alternatives for Decision Making
Devi, a young and enthusiastic fashion designer, started a boutique called Devi Fashions (DF) after graduating with a degree in fashion designing. Within a short span of time, DF became hugely popular among urban college students, working women, and premium segment customers, for its unique, customized, and fashionable contemporary as well as traditional wear. Overwhelmed by the success of the business, Devi wanted to launch new models during the third quarter of the financial year 2019-20, based on the expected revenues for the quarter. However, she was in a dilemma about estimating the actual revenues.

Devi's Dilemma – Uncertainty in Revenue Recognition
The case study can help in discussing the necessity of calculating the net realizable value of the stock during the end of the financial year, and also for discussing how to calculate the value of various classes of inventory and the factors that need to be considered for the valuation of raw materials as per principles in the Accounting Standard-2 (Inventory Valuation)

Shutdown or Continue - Evaluating the Manufacturing Efficiency
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