Entrepreneurship, Costing, Marketing and Retail
Entrepreneurship, Costing, Marketing and Retail
This domain tests business planning, cost sheets, pricing, break-even, marketing mix and retail formats. Expect numerical costing with overhead recovery and margin logic.
Core rules and concepts
- A cost sheet separates direct material, direct labour, direct expenses, factory overhead, administration, selling and distribution. Wastage, rejection and packaging must be included.
- Fixed costs do not change with volume in the short run; variable costs do. Contribution = selling price − variable cost. Break-even units = fixed cost ÷ contribution per unit.
- Markup is based on cost; margin is based on selling price. They are not interchangeable.
- Marketing mix covers product, price, place and promotion. Retail decisions include assortment, visual merchandising, inventory and channel.
- GST is a tax collected on behalf of government, not a cost or profit line.
Worked example
Fixed cost is Rs 80,000 per month; variable cost is Rs 180 per unit; selling price is Rs 300. Contribution = 300 − 180 = Rs 120. Break-even = 80,000 ÷ 120 = 666.7, so 667 units. At 800 units, profit = (800 × 120) − 80,000 = Rs 16,000. The reasoning is that each unit contributes Rs 120 toward fixed cost; only after 667 units does contribution cover fixed cost.
Traps
Do not use markup as margin. Do not omit wastage, freight, commissions or returns. Do not treat fixed cost per unit as constant. Do not add GST to revenue as profit. Do not price below full cost without a deliberate strategy.