Abstract

The case study discusses the cost structure of Paneeyam Private Limited (Paneeyam), a beverage start-up and a loss-making company. The case study also discusses the challenges faced by the management of Paneeyam. The challenge before Paneeyam is to break even as well as achieve the targeted profit which the company had promised to its investors. The case study also provides various cost-related information about Paneeyam. The case study helps to understand the impact of costs and volume of sales on the profitability of a company. It also helps to understand the volume of sales required to achieve breakeven and profitability, given the cost structure of the company.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• To understand the relationship between costs and profit with changes in volume.
• To understand the significance of Break-Even Analysis and the computation of BEP.
• To understand the effect of changes in underlying factors on the BEP and Margin of Safety.

Keywords

CVP Analysis; Break-Even Analysis; Margin of Safety; Contribution; Marginal Cost; Variable Cost; CVP Chart; Break-Even Chart