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Accounting Case

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break even analysis and Balanced Scorecard - XYZ plc

Executive Summary:

In today's competitive era, the employment of financial and accounting frameworks occupies a prominent role to evaluate the performance of number of firms. There are various frameworks which focus on dissimilar aspects pertinent to the business potential of organisations. The wide application of these frameworks supports the management to take relevant decisions regarding innovative activities which boost up the company's growth and performance.

In light of the above aspects, the current report is an attempt made to illustrate the application of cost-volume-profit (CVP) and Balanced Score Card (BSC) approaches by initiating a clear evaluation of XYZ plc. The intension behind using these frameworks is to make operational changes of selected firm. In this process, the key successes and challenges of each tool are analysed and suggested countermeasures for further strategic opportunity to the firm. Finally, the limitations of the analysis are also put forwarded in this report.

Business Context and Company Information:

XYZ plc is a small consulting company positioned in Singapore. It is known for selling specialty software products under its diverse business line segments. The company preserves a technology specialist in order to burn the software to a DVD, print and affix a label, insert it into a DVD envelope and then add the DVD into a padded mailer. Thereby, the clerk prints a mailing label and postage. Finally, the deliveryman will drop off various mailers at the post office promptly.

XYZ plc employed a web developer in order to plan and execute a website for the organisation. But, in order to save the overall expenses related with ejecting out DVDs, the company thought of allowing the consumers to place the order online and download the software directly from the website. The company is required to generate a business plan to accomplish this task.

Singapore is a fast growing market that is majorly dependent in accomplishing huge quality growth having substantial country specific costs for diverse businesses. The market seems to be very competitive with huge consumer base. XYZ plc is consistently making efforts to establish the software DVD market presence in Singapore. Hence, the company strives to achieve the following objectives successfully.


To become as the well- qualified and cost-efficient software DVD seller providing the download services online to the consumers worldwide


The main business strategies of XYZ company involved in creating strong association with the markets , consumers , third parties and shareholders.

Furthermore, retaining labor force by providing flexible work environment, quick delivery of web services based on the instantaneous consumer's feedback, security, constant updates regarding the software related information are required to be developed as a part of the business strategy by the company.

Principal activities:

The principal activities in strategic planning involved in accomplishing the company's goals and plans majorly. XYZ plc works on focusing on long-standing complexities emphasizing the sustenance, development implemented by the entire Board, CEO and other staff members of the company. It also works hard to develop their web services online through the combined effort of all the major stakeholders of the company. However, the process of availing orders and generating the services online and facilitating download easily is the core activity of the company.

Core competencies:

Core competencies of XYZ plc mainly include:

Planning and implementing supply systems that efficiently associate web services online

Capability to plan and distribute a 'consumer interface' that personalizes online services and generating it more successful

Facilitating reliable and successful distribution infrastructure in handling the customer satisfaction

Revenue cycle:

XYZ plc attains the primary sources of revenue by availing the consumer's sales orders. Therefore, the key inputs of the revenue cycle of XYZ plc include the following ones:

Sales orders: These are normally prepared in number of copies and prenumbered

Sales invoices: These are prepared after shipment of goods or offering of a service

Customer checks: These are deposited intact by the cashier day by day in the company

Shipping Notices which are served as packing slips and bills of lading

Remittance advices which serve as source document for credits to accounts receivable. However, the advices may be turnaround documents

Credit memos issued for accomplishing sales returns and allowances

Expenditure cycle:

Key Inputs of XYZ plc

Outputs of XYZ plc

Business Case Analysis:

Break even analysis:

In general, break even analysis is the predominant common technique meant for assessing the financial feasibility of particular firm or product. In this analysis, specific point which termed as breakeven point is attained at where the earnings are equal to expenditures. There will be no profit or loss at this point in the analysis. Usually, it expresses as dollar sales or unit sales. It is fact that the break even units represent the sales levels which are needed for covering the expenditures. Level of sales below the point indicates loss and above the point represents profit. So that, break even analysis is as tremendous tool for quantifying the production level required for undertaking the new project. Generally, this analysis comprises of two cost types such as variable costs and fixed costs. Fixed costs refers to overhead type of costs which are constant and doesn't vary like variations in the output levels whereas, variable



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