Prof. SRC & Dr. KB Innovations in Measuring the Impact and Action Recourse for Changes in Costs Prices Product Mix and Volume on Profits, Developed as an Effective Mathematical Tool for Reporting and Decision Making by Interlinking the Economic Analysis and Financial Analysis through Breakeven Analysis

Abstract

The innovative applications of BEA for the study and measurement of effect of changes in any one or some or all the variables under consideration in BEA on the rate of profit with simple mathematical calculations is developed for single product firm in the research paper published in IJBM in June 2016. This is the model developed as a useful tool for measuring the impact of changes in volume along with changes in proportions of output and sales of a multiproduct firm apart from changes in price & costs (both fixed & variable) on profits and profitability. This model further pay the way for measurement of impacts of changes in the economic/market/demand like external environment factors and or the impact of changes in internal factors like marketing efficiency (buying/selling) operational efficiency/ (material/Labour)/promotional efficiency (advertisements/campaigning)on profits through a given change in price/costs/volume/volume proportions directly on profits and profitability. Further the very basis forms as the basis for effective and timely decision on recourse in consideration of the changes in costs and cost-drivers. Further it is hoped that it become a useful tool for decision making under strategic considerations for attaining competitive edge under the situations of multidimensional dynamic changes in costs and prices. This is the tool/system that works as a monitoring/observatory and controlling of profits. Further is plays a pivotal role in framing/development and implementation of competitive strategy.