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Strategy to Maximize Profits for the Clipboard Tablet Company

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Introduction Time has warped again, which allows me an opportunity to utilize the cost, volume and profit analysis to develop a new plan for the next four years. The strategy is to maximize profit for the Clipboard Tablet Company for the next four years. After accessing the strategy from 2012-2015, we will calculate variable cost, variable cost per unit, contribution margin, contribution margin per unit, contribution margin ratio, break-even point in sales dollars and break-even point in units sold to fine tune our strategy. Below is the strategy matrix with the year-by-year decisions made based on price and R&D allocations.
Year by Year Decisions: Pricing & R&D Allocations 2012 2013 2014 2015
X5 Price - $275 Price -$275 Price - $275
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This strategy reduced the breakeven point for X5 and X7 by a little over 2 million dollar, while the X6 breakeven point increased a little over 11 million dollars. For 2013 to 2014, the no changes were made to the prices of the tablets, the R&D of the X5 was reduced by 5% and the X7 increased by 5% bringing the X5 to 5%, the X7 to 56% respectively. The impact of this move was the break-even point in units sold for X5 model with decrease of 9,600 from 619,200 to 609,600 and reversed effect for X7 model which increased by 10,000 from 414,500 to 424,500. For 2014 to 2015, the decision was made not to change the prices, but R&D was adjusted for the X6 to 15%, and the X7 increased to 85%. The X5 was discontinued due to its decline in the market. The breakeven point in units sold decreased for the X6, while the X7 increased.

Analysis of new strategy
Year by Year Decisions: Pricing & R&D Allocations 2012 2013 2014 2015
X5 Price - $280 Price -$280 Price - $280 Price - $280 R&D % - 0% R&D % - 0% R&D % - 0% R&D % - 0% Discontinue? No Discontinue? No Discontinue? No Discontinue? No
X6 Price - $450 Price - $450 Price - $450 Price $450 R&D % - 67% R&D % - 67% R&D % - 50% R&D % - 40% Discontinue? No Discontinue? No Discontinue? No Discontinue? No
X7 Price - $190 Price - $180 Price - $180 Price - $180 R&D % - 33% R&D % - 33% R&D % - 50% R&D % - 60% Discontinue? No Discontinue? No Discontinue? No
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