This 5 page paper answers questions on a case provided by the student regarding the launch of a new product. The paper shows how the student can use financial data to summarise a companies strengths and weaknesses as well as how to calculate a break even analysis.
Name of Research Paper File: TS14_TEprodln.rtf
Unformatted Sample Text from the Research Paper:
income brought in as revenue as has been paid out in expenses. If we look at the fincial summary, we can see that the current position is one of
a loss. There has been a total loss of $3,829,774. We can use this as our starting point, and consider the amount of units that have to be sold
in order to make a profit. Here we are given a unit cost, we will assume that this unit cost. We also have the period costs. Therefore, we have a
loss brought forward, in addition to this for period seven we will have the same type of ongoing costs, therefore, to break even we need to calculate how many units
need to be sold. The cost for advertising and wages is given as a budget of $1,418,000, when we add it to the total loss for the period of six,
$3,829,774, we will have a total of $5,247,774 . To analysis this we can see the amount of contribution that is made by each item sold. The wholesale
price is 230 and the cost is 88, this gives us a contribution of 142 per item sold. To break even in
period seven we need to divide the amount outstanding at the end of that period by the contributions to get the number of units that would need to be sold.
5,247.774/142 = 36,956. The current sales level for period six is 44,383, and therefore, this is a large, therefore, this appears likely to be achieved in the following period.
If we look at the amount of contribution for sales of that same level this would amount to $6,302,386 (44,383 x 142), from this we can deduct the period