CBSE Class 9 · From Ideas to Startups

Business Plan Class 9: Functional Areas, Costs and Profit

Updated 17 October 2026 · Fact-checked

A business plan is a written blueprint of a business's goals and the steps to reach them, covering needs and idea, customers, money and costs, location, human resources, pricing, promotion and risks. Its questions group into four functional areas: management and operations, finance and accounting, human resources, and marketing and sales. Profit equals total revenue minus total expenses.

Understand Business Plan, Functional Areas and Profit

Business plan. A written document, a blueprint of the goals of a business and the steps to reach them. It helps the entrepreneur stay organised, set priorities and decide systematically. NCERT uses a bakery to show the eight considerations:
1. Needs and idea: what people need and what problem the product solves (fresh bread, whole-wheat options).
2. Potential customers: children, young adults, families.
3. Money and costs: oven, rent, salaries, ingredients, packaging; funding from savings, banks, friends, relatives or investors.
4. Location: near schools, colleges or markets, plus online orders.
5. Human resources: bakers, helpers, billing and delivery staff.
6. Pricing and profits: cover costs, earn a profit, stay affordable.
7. Promotion: social media, posters, offers, packaging, service.
8. Challenges and risks: competition, rising raw-material costs, changing tastes, uneven cash flow, perishable stock, consistent quality.
A plan is *dynamic* and should be revised when costs, customers or competition change.

Four functional areas.

Area	Focus	Bakery example
Management and operations	Efficient processes; producing and delivering on time	Choosing equipment, monitoring quality, daily production without waste
Finance and accounting	Financial health; planning, obtaining and using funds; recording transactions	Fixed costs (rent, ovens), variable costs (ingredients, packaging), cash flow, profit and loss account
Human resources	The right people and skills	Hiring bakers and cashier, hygiene training
Marketing and sales	Customer awareness and growth	Catchy name, social media, discounts, seasonal items, online orders

A business can fail despite a great idea if one area is weak: poor finance can cause a cash crunch, poor HR bad service, poor operations inconsistent quality and poor marketing too few customers.

Costs, revenue and profit.

Fixed costs stay the same whatever the output in the short term: rent, equipment, insurance.
Variable costs change with output: raw materials and packaging.
Revenue is the total money earned from main operations (sales).
Accounting means recording, organising and reporting transactions so that the owner knows how the business is doing; it is also needed for tax compliance.
Profit = Total Revenue - Total Expenses. Profit after tax = Profit before tax - Tax.

ABC Bakery (fictional), March 2026. Income from breads, pastries and cookies, cake orders and delivery charges totals Rs 2,95,000. Expenses: raw materials Rs 1,00,000, packaging Rs 12,000, rent Rs 40,000, salaries Rs 30,000, utilities Rs 15,000, advertising Rs 8,000, miscellaneous Rs 7,000 and interest Rs 10,000, total Rs 2,22,000. Profit before tax = Rs 73,000; tax Rs 13,000; profit after tax = Rs 60,000.

Business Plan, Functional Areas and Profit: key facts

Eight considerations: Needs and idea
Customers
Money and costs
Location
Human resources
Pricing and profits
Promotion
Challenges and risks; A dynamic roadmap.
Four functional areas: Management and operations
Finance and accounting
Human resources
Marketing and sales; Weakness in one can sink a good idea.
Costs: Fixed: unchanged with output (rent, equipment, insurance) | Variable: change with output (raw materials, packaging); Short-term view.
Profit: Profit = total revenue - total expenses | Profit after tax = profit before tax - tax; ABC Bakery: 2,95,000 - 2,22,000 = 73,000.
Total cost: Total cost = fixed cost + variable cost | Variable cost = cost per unit x units; Derived from the definitions.

How to answer Business Plan, Functional Areas and Profit questions

Questions ask you to list considerations in a business plan, assign activities to functional areas, classify costs as fixed or variable, and compute profit or loss from given figures.

1For a plan question, go through the eight considerations in order and give one line each, with an example.
2For functional areas, name the area by the focus: processes, money, people, customers.
3For costs, ask: does this change if output doubles? If no, fixed; if yes, variable.
4For profit, add all revenue sources, add all expenses, subtract; then subtract tax if asked.
5Check by adding the expenses twice and writing the unit (Rs).

Business Plan, Functional Areas and Profit in real life

The idea, met in an everyday situation. Answer the question in your own words, then compare with the model answer. The one-line hook is what to remember.

A tuition-notes stall

Suppose a student sells printed notes at school for Rs 20 a set. She sells 150 sets in a month. Her costs are paper and printing at Rs 8 a set and a fixed Rs 600 monthly rent for a small table.

Find revenue, total cost and profit.

Try it first, then show the solutionSolution

Revenue = 150 x 20 = Rs 3,000.
Variable cost = 150 x 8 = Rs 1,200; fixed cost = Rs 600.
Total cost = 1,800; profit = 3,000 - 1,800 = Rs 1,200.

Answer: Revenue is Rs 3,000, total cost is Rs 1,800 and profit is Rs 1,200.

Memory hook: Revenue minus every cost.

A weak link

Suppose a restaurant has delicious food and a good location but does not keep records, so it does not know when cash is running out and suddenly cannot pay suppliers.

Which functional area is weak and what is the result?

Try it first, then show the solutionSolution

Keeping records and managing funds is finance and accounting.
Poor finance causes a cash crunch.
Even a good product cannot continue without cash.

Answer: Finance and accounting is weak. Without records the owner cannot foresee a cash crunch, which can sink a business with a good idea.

Memory hook: A chain breaks at its weakest link.

Tricks to remember Business Plan, Functional Areas and Profit

Short memory aids. Say each one aloud once, then use it on a question the same day.

Plan in 8: N-C-M-L-H-P-P-R
Needs, Customers, Money, Location, Hands (HR), Price, Promotion, Risks.
Use it when: Eight considerations.
Four areas: O-F-H-M
Operations, Finance, HR, Marketing.
Use it when: Functional areas.
Fixed or variable
Double the output: if the cost stays, it is fixed; if it doubles, it is variable.
Use it when: Classifying costs.

Business Plan, Functional Areas and Profit: solved examples

Ordered from board level to HOTS. Try each one before you open the solution.

Example 1: Cost type · 1 mark · MCQBoard level

Which of the following is a fixed cost for a bakery?
(a) Flour
(b) Packaging boxes
(c) Shop rent
(d) Eggs

Try it first, then show the solutionSolution

Rent does not change with output, so it is fixed (1 mark).

Answer: (c) Shop rent

Example 2: Business plan (2 marks) · 2 marks · Very short answerBoard level

What is a business plan? Why should it be revised from time to time? (2 marks)

Try it first, then show the solutionSolution

A written blueprint of the business's goals and the steps to reach them (1 mark).
Because costs, customers and competition change (1 mark).

Answer: A business plan is a written blueprint of a business's goals and the steps to reach them. It must be revised because costs, customers and competition change over time.

Example 3: Profit calculation (3 marks) · 3 marks · Short answerHarder board level

A juice stall earns Rs 12,000 in a month from selling 600 glasses. Its costs are rent Rs 3,000, helper Rs 2,000 and Rs 8 per glass for fruit and cups. Find the variable cost, total cost and profit. (3 marks)

Try it first, then show the solutionSolution

Variable cost = 600 x 8 = Rs 4,800 (1 mark).
Total cost = 3,000 + 2,000 + 4,800 = Rs 9,800 (1 mark).
Profit = 12,000 - 9,800 = Rs 2,200 (1 mark).

Answer: Variable cost = 600 x 8 = Rs 4,800. Total cost = 3,000 (rent) + 2,000 (helper) + 4,800 = Rs 9,800. Profit = 12,000 - 9,800 = Rs 2,200.

Example 4: Assertion-reason: functional areas · 1 mark · Assertion-reasonHarder board level

Assertion (A): A business with a great product can still fail.
Reason (R): Weakness in finance, HR, operations or marketing can undermine the business.
(a) Both A and R are true, and R is the correct explanation of A.
(b) Both A and R are true, but R is not the correct explanation of A.
(c) A is true, but R is false.
(d) A is false, but R is true.

Try it first, then show the solutionSolution

The chapter says weakness in one area can sink even a great idea; R explains A (1 mark).

Answer: (a) Both A and R are true, and R is the correct explanation of A.

Example 5: Profit and tax (5 marks) · 5 marks · Long answerHOTS / competency

A bakery has the following for a month: bread sales Rs 1,20,000; cake orders Rs 90,000; delivery charges Rs 10,000. Expenses: raw materials Rs 80,000; packaging Rs 10,000; rent Rs 35,000; salaries Rs 28,000; utilities Rs 12,000; advertising Rs 5,000. If tax is Rs 9,000, find (i) total revenue, (ii) total expenses, (iii) profit before tax, (iv) profit after tax, and (v) identify the fixed costs in the list. (5 marks)

Try it first, then show the solutionSolution

(i) 1,20,000 + 90,000 + 10,000 = Rs 2,20,000 (1 mark).
(ii) 80,000 + 10,000 + 35,000 + 28,000 + 12,000 + 5,000 = Rs 1,70,000 (1 mark).
(iii) 2,20,000 - 1,70,000 = Rs 50,000 (1 mark).
(iv) 50,000 - 9,000 = Rs 41,000 (1 mark).
(v) Fixed: rent and salaries (and utilities/advertising if they do not vary with output) (1 mark).

Answer: (i) Total revenue = 1,20,000 + 90,000 + 10,000 = Rs 2,20,000. (ii) Total expenses = 80,000 + 10,000 + 35,000 + 28,000 + 12,000 + 5,000 = Rs 1,70,000. (iii) Profit before tax = 2,20,000 - 1,70,000 = Rs 50,000. (iv) Profit after tax = 50,000 - 9,000 = Rs 41,000. (v) Rent and salaries are fixed costs because they do not change with the number of loaves baked; raw materials and packaging are variable.

Example 6: Case: the school canteen plan · 4 marks · Case-basedHOTS / competency

Read the case and answer the questions.

Students plan a snack stall for a school fair. They list who will buy (classmates and parents), what to sell (sandwiches and juices), the cost of bread, cheese and cups, where to place the stall, how many students will cook and serve, what price to charge, how to announce it, and what could go wrong, such as rain or unsold food.

(i) Match "how to announce it" to a functional area. (1)
(ii) Which two considerations of a business plan involve "what could go wrong" and "what price to charge"? (1)
(iii) Classify bread and cups as fixed or variable, and the table rented for the stall as fixed or variable. (2)

Try it first, then show the solutionSolution

(i) Marketing and sales (1 mark).
(ii) Challenges and risks; pricing and profits (1 mark).
(iii) Bread and cups are variable (they change with the number of snacks); table rent is fixed (2 marks).

Answer: (i) Marketing and sales. (ii) "What could go wrong" is the consideration of challenges and risks, and "what price to charge" is pricing and profits. (iii) Bread and cups are variable costs because they change with the number of snacks sold; the rent of the table is a fixed cost.

Where students lose marks in Business Plan, Functional Areas and Profit

The slips examiners see most often, and what to write instead.

Mistake: Adding revenue to expenses
Confusing signs.
Wrong working
Profit = revenue + expenses.
Right working
Profit = revenue - expenses.
Do this: Subtract.
Usually costs: 2 marks.
Mistake: Treating rent as variable
Not testing with output.
Wrong working
Rent rises with sales.
Right working
Rent is fixed in the short term.
Do this: Double-the-output test.
Usually costs: 1 mark.
Mistake: Skipping the unit or label
Missing "before tax" or "after tax".
Wrong working
Profit = 73,000 (final).
Right working
Profit before tax = Rs 73,000; after tax = Rs 60,000.
Do this: Label each step.
Usually costs: 1 mark.
Mistake: Naming only four of eight considerations
Incomplete list.
Wrong working
Customers, money, location, risks.
Right working
Include needs, HR, pricing and promotion as well.
Do this: Learn N-C-M-L-H-P-P-R.
Usually costs: 1-2 marks.

Exam tips

Write the profit formula first and then substitute figures line by line.
Add expense items twice, as one slip spoils the answer.
Tie each consideration of the plan to the bakery example; it earns the application marks.
Name the functional area using its focus word: processes, funds, people or customers.

Practice questions on Business Plan, Functional Areas and Profit

Write each answer on paper first. Open the hint only if you are stuck, and the answer only when you have finished.

Q1 · 1 mark · MCQBoard level
Which functional area deals with hiring and training staff?
(a) Finance and accounting
(b) Marketing and sales
(c) Human resources
(d) Management and operations
Hint
People and skills.
Answer
(c) Human resources
Q2 · 2 marks · Very short answerBoard level
A cycle-repair shop pays monthly rent and buys spare parts for each job. Classify the rent and the spare parts as fixed or variable, giving the reason. (2 marks)
Hint
Does it change with output?
Answer
Rent is a fixed cost because it stays the same whatever the number of jobs in the short term. Spare parts are a variable cost because they change with the number of jobs done.
Q3 · 3 marks · Short answerHarder board level
A tailor earns Rs 40,000 in a month. Fixed costs are Rs 10,000 and variable costs Rs 400 per shirt for 50 shirts. Find total cost and profit. (3 marks)
Hint
Variable = rate x quantity.
Answer
Variable cost = 400 x 50 = Rs 20,000. Total cost = 10,000 + 20,000 = Rs 30,000. Profit = 40,000 - 30,000 = Rs 10,000.
Q4 · 1 mark · Assertion-reasonHarder board level
Assertion (A): A business plan should never be changed once written.
Reason (R): The plan is dynamic and should be revised when costs, customers or competition change.
(a) Both A and R are true, and R is the correct explanation of A.
(b) Both A and R are true, but R is not the correct explanation of A.
(c) A is true, but R is false.
(d) A is false, but R is true.
Hint
Dynamic.
Answer
(d) A is false, but R is true.
Q5 · 5 marks · Long answerHarder board level
Explain the four functional areas of a business using the bakery example. (5 marks)
Hint
Operations, finance, HR, marketing.
Answer
Management and operations covers efficient processes, such as choosing equipment, monitoring quality and daily production without waste. Finance and accounting covers planning and using funds and recording transactions, such as rent, ingredients, cash flow and the profit and loss account. Human resources covers hiring the right people, such as bakers, helpers and a cashier, and training them in hygiene. Marketing and sales builds customer awareness through a catchy name, social media, discounts, seasonal items and online orders. A weakness in any one area can sink an otherwise good idea.
Q6 · 3 marks · Short answerHOTS / competency
Suppose a small business has monthly revenue of Rs 50,000, fixed costs Rs 18,000 and variable costs that are 60 per cent of revenue. Find the profit. If revenue falls to Rs 30,000 with the same fixed cost and variable cost per rupee of revenue, find the new profit and comment. (3 marks)
Hint
Variable cost moves with revenue; fixed does not.
Answer
At Rs 50,000: variable = 60% of 50,000 = Rs 30,000; total cost = 18,000 + 30,000 = Rs 48,000; profit = Rs 2,000. At Rs 30,000: variable = 60% of 30,000 = Rs 18,000; total cost = 18,000 + 18,000 = Rs 36,000; loss = 30,000 - 36,000 = -Rs 6,000. Fixed costs do not fall with sales, so a fall in revenue can turn a small profit into a loss.

Test your recall

Answer in your head or on paper first, then open the card. Pulling an answer out of memory makes it stick far better than re-reading.

1.What is a business plan?Show answer
A written blueprint of a business's goals and the steps to reach them.
2.How many considerations does the plan have in the chapter?Show answer
Eight.
3.What is profit?Show answer
Total revenue minus total expenses.
4.Name two fixed costs.Show answer
Rent and equipment (also insurance).
5.In the chapter's fictional bakery for March 2026, what was the profit before tax?Show answer
Rs 73,000 (income Rs 2,95,000 minus expenses Rs 2,22,000).

Business Plan, Functional Areas and Profit: frequently asked questions

What are the functional areas of a business?

Management and operations, finance and accounting, human resources, and marketing and sales.

How do fixed costs differ from variable costs?

Fixed costs stay the same whatever the output; variable costs change with output.

Why is a business plan useful?

It sets goals, steps and priorities, helping the entrepreneur decide systematically.

How do you calculate profit?

Subtract total expenses from total revenue; subtract tax to get profit after tax.