summarise the following graph in 150-200 words in the form of an analytical paragraph highlighting the difference between total revenue, total cost, and total profit of firm xyz (exam Idea guide Page number 479)
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Answer:
The Pie chart shows the expenditure of a family on various items and savings in a year. The family spends 20% of its income on food, 20% on household activities, 10% on clothing, 15% on children's education, 5% on transport, and 5% on entertainment. With all these expenditures, the family is able to save 25% of its income in a year.
The family is spending their money wisely. Food and education play an important role in life. To be healthy, one should not compromise on the quality of food while good quality education is the basic requirement for child's bright future. Spending 5% on entertainment and 10% on clothing are also reasonable. With all these expenditures the family is able to do a saving of 25% in a year which is beneficial for their future.
Pie charts are a typical type of data representation where data is represented as a part of a circle. The circle represents the total value (or 100%), and the different parts represent certain proportions (or percentage) of the total. In a pie chart, the are length of each sector (and in turn its central angle and area), is proportional to the part it represents.
The origin of the pie chart is traced back to Florence Nightingale in 1858. This was the year when she presented a paper on the causes of deaths in her army in the eastern part of the world.
Following is the pie chart originally developed by Florence Nightingale in the year 1858. (Actually called by her as the ‘Polar Area Diagram’.)
The below graphic gives the number of deaths that occurred from the diseases that could have been prevented (in light grey), those that were the results of wounds (in dark, grey) and those due to other causes (in black).
There are two approaches to constructing a pie chart from any given data.
A) Degree Approach: The central angle in a circle represents 360∘ , so any part or segment in pie chart is calculated as a proportion of 360∘.
B) Percentage Approach: In this case, any part or segment in a pie chart is calculated as a part of 100%.
If we convert the same pie chart into the degree format, we will be required to do the following conversions:
Total = 100 = 360∘
Hence = 1% = 3.6∘
Center = 10% = 36∘
North = 20% = 72∘
South = 25% = 90∘
East = 15% = 54∘
West = 30% = 108∘
Limitations of Pie Charts
Despite the pie chart being one of the most important ways to represent data, it is marred by limitations of its own:
Pie charts can be used only when the sum of all categories is given, for example if the categories represent proportions or percentage of a total.
A single pie chart can represent only one continuous variable.
Prerequisites (Related Formulas)
In pie charts, from geometry, we know that the area the sector of a circle must be proportional to the corresponding value of the component.
Since the sum of all the central angle is 360°, we have
Central angle of the component = {(value of the component/Total value) x 360} °.
Significance of Pie Charts
The pie chart has gained prominence due to the following reasons:
In a pie chart, we get a clear picture of the contribution of different sectors to the buildup of the total. E.g.., presentation of budgets.
Comparing two pie charts is easier than comparing two bar charts or any other format of data representation.
Let us see the following data :
Sale value in 2005 = Rs 180 crores
Sale value in 2006 = Rs 204 crores
Example 1: What is the presentation increase in the sales value of the East zone?
Solution: There are two percentage increase (A) Total total sales value of company XYZ is increasing. (B) The percentage contribution of the East zone is increasing.
Percentage increase in The total sales value of the company XYZ = 30%
Percentage increase in the percentage contribution of the East zone = 20%
Hence, the net percentage increase = 56%
(Successive increase of 20% and 30%)
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