Entrepreneurship, Costing and Small Business Management
This section covers Entrepreneurship, Costing and Small Business Management, the domain that tests costing a print job, pricing, break-even analysis and the basic management of a small printing enterprise.
Core rules and concepts
- Job cost includes paper, ink, plates, consumables, labour, machine time, power, overhead, waste and finishing; profit is added after full cost.
- Fixed costs do not change with output; variable costs rise with each job. Contribution = selling price − variable cost.
- Break-even quantity = fixed cost ÷ contribution per unit. Margin of safety = expected sales − break-even sales.
- Mark-up is calculated on cost; margin is calculated on selling price. They are not interchangeable.
- Working capital funds paper, wages and overhead before payment is received; late payment can make a profitable firm fail.
- In India, Udyam registration, GST compliance, invoicing and record-keeping are practical requirements for many small firms.
Worked example
Fixed cost is ₹45,000 per month. A job sells for ₹400 and has variable cost ₹250. Contribution = ₹150 per job. Break-even = 45,000 ÷ 150 = 300 jobs. At 420 jobs, margin of safety = 120 jobs and profit = 120 × 150 = ₹18,000. If paper waste rises by ₹20 per job, contribution falls to ₹130 and break-even rises to 347 jobs.
Traps
Do not quote a price before adding waste and overhead; do not confuse mark-up with margin; do not treat GST collected as income; do not ignore depreciation of the press; do not mix business and personal cash.