This 4 page paper is based on a fictitious scenario provided by the student. The paper outlines the way cost profit volume analysis may be used to assess a price and break even point. All calculations are shown. The bibliography cites 4 sources.
Name of Research Paper File: TS14_TEhandslp3.doc
Unformatted Sample Text from the Research Paper:
types of costs in the manufacture of the phone, by assessing the different costs that are incurred it is possible to assess the break even point for different sales points
and assess the profit level at different pricing points. The patterns of the different sales are already known, with the X5 having a growth in the first year there is
the fastest decline, and as such if looking at four years it may be argued this is a product where no money should be wasted on research and development, as
it is closet of all the products to the end of its lifecycle (Saaksvuori and Immonen, 2010). In order to develop a strategy for the four years, we will
assume no further investment in research and development. To calculate the cost of manufacture we need to look at the fixed costs, which are given and the variable costs.
The first stage is to calculate the variable costs, this can be extracted from the existing data looking at the total variable cost and the number of units sold to
gain a variable cost per unit (Chadwick, 2004). Table 1 X5 variable cost per unit Total variable costs 202,724,283 Number of units sold 1,448,031 Variable cost per unit 140.00
The fixed costs are given as 70,000,000, so we have the costs. Here we will assume that we will reduce the price of the X5 as we know sales are
going to decline in this way we can try and maximise sales. If we set the price at $220 we can calculate how many units the firm will have to
sell to break even for all costs each year. Table 2 X 5 break even point at $220 selling price Revenue per unit (a) 220 Variable costs per unit