Asu Wood Store Case

Breakeven Analysis for Product Tylenol Approach 1 - Same price as Tylenol Approach 2a - Cheaper than Tylenol Approach 2b - Cheaper w/lowered trade cost $ $ $ $ Unit Cost (Variable Cost) 0.60 0.60 0.60 0.60 Trade Cost (Selling Price to Retailers) $ 1.69 $ 1.69 $ 1.05 $ 0.70 Fixed Cost (Advertising) 2,000,000 6,000,000 6,000,000 6,000,000 Break-Even Quantity [Fixed Cost/(Trade Cost-Unit Cost)] 1,834,862 5,504,587 13,333,333 60,000,000 Contribution Margin (Unit) 64% 64% 43% 14%

5. Determine the necessary sales in unit and dollars to break-even or attain desired profit using the break-even formula.

In our second assumption, instead of using the cost of goods per cases in 1986, we try to use the percentage it counts in the total expenses which is 50.4% and to find the sales needed to break-even. The detail of the calculation is shown in the answer for questions d. The result is that 95,635, a little bit higher than the estimated sales of 90,000.

1. The local Mastermind store sells innovative educational toys. Part of their service is giving advice to customers about the best toys for a particular age group, which requires having more customer service representatives in the store. During the month long Christmas buying season, it makes half of its $500,000 yearly sales. Its contribution margin on average is 40% and its fixed costs for the year are about $150,000. The owner believes that she could make even higher sales, if she had more customer service representatives on the floor during the peak season. She plans on hiring four more people for 200 hours each at $20 per hour. How much additional revenue does she have earn to the nearest dollar

The break even values for a profit model are the values for which you earn $0 in profit. Use the equation you created in question one to solve P = 0, and find your break even values.

First you have to calculate the Gross Profit: Gross Profit = = = Sales – Cost of Goods Sold $650,000 - $485,000 (calculated in Part A) $165,000

1. Using a similar approach as example 2.3 (textbook page 75): “Finding the Sale Price of Items in a Department Store”, provide your analysis for the following problem statement:

The variable cost per unit is $25 and the revenue per unit is projected to be $45.  Find the break-even point.Answer

5. I want to make 10 headbands / pair clips and the ingredients cost me $39/10=$3.9. So, it costs me $3.9 to make each clips/ headache and if I sell them for $6.5 each, I make 2.6 on each pair of clips or headbands

Matlock Company uses a perpetual inventory system. Its beginning inventory consists of 67 units that cost $40 each. During June, the company purchased 202 units at $40 each, returned 8 units for credit, and sold 168 units at $67

h. Calculate the rooms sold, occupancy %, and sales dollars he will need to break even if he opens the gift shop.

The owner of Fine Fettle Herbal Shop will finance the opening of its shop by borrowing money from the owners’ mother. She will lend $50,000 to her daughter to help start her business. With this $50,000, the owner will use $29,990 of it to put 10% down on the purchased building. With the other $20,010, the owner will make the necessary changes to the building, use the money for marketing, for business expenses and for purchasing inventory. The costs associated with changing the building are painting the inside, $179.79, painting the outside, $884.50, two signs, $1,590, and shelving, $2, 310. The next items that this loan would be used for would be the initial running of the radio, $500, the initial running of the newspaper, $400, flyers, $35, brochures, $262.49, and business cards, $39.99. The next items it will be used for is the business expenses. This includes a POS system, $1,500, a computer, $799.99, the first month of phone and Internet, $75, the first month of utilities, $200, the first month of QuickBooks Online, $39.95, a My Passport Ultra, $60, and a dehumidifier, $187. The total of all these expenses comes to $9,210, leaving $10,796 for inventory and other unforeseen expenses.

6. Breakeven books = 450000/ (24.95-3.5) = 20979. MedNet has to sell 20979 books to make breakeven. I think that this contract will be signed. 1% of monthly visitors will be about 43000

A company's costs, in millions of dollars, are given by the equation, C = x2 3x 27, where x is the number of items sold, in thousands. What are the costs when 1,000 items are sold? 1,500 items? (Hint: If the number of items sold is 1000, then x=1.

When looking at break-evens it is also helpful to look at fixed and variable costs. Fixed overhead is steady and can be factored in quite accurately. Variable costs are not as simple to calculate but in many industries variable costs follow certain percentages or ratios so they are easier to project. According to Tim Berry, the Break-even Analysis lets a manager determine what needs to be sold, monthly or annually, to cover the costs of doing business-the actual break-even point. The Break-even Analysis depends on three key assumptions:1.Average per-unit sales price (per-unit revenue: This is the price that you receive per unit of sales2.Average per-unit cost: This is the incremental cost, or variable cost, of each unit of sales. If you buy goods for resale, this is what you paid, on average, for the goods you sell. If you sell a service, this is what it costs you, per dollar of revenue or unit of service delivered, to deliver that service.