Martha Manufacturing produces a single product that sells for $80. Variable costs per unit equal $32. The company expects total
fixed costs to be $72,000 for the next month at the projected sales level of 2,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately. 1) What is the current breakeven point in terms of number of units?
2) Suppose management believes that a $16,000 increase in monthly advertising expense will result in a considerable increase in sale. Sale must increase by how much to justify this additional expenditure?
3) Suppose that management believes that a 10% reduction in the selling price will result in a 10% increase in sales. If this proposed reduction in selling price is implemented,
a) Operating income will decrease by $8,ooo
b) Operating income will increase by $8,000
c) Operating income will decrease by $16,000
d) Operating income will increase by $16,000.
24,000 is the profit they would make for hitting their goal.
Question 1: What is the break-even point? The break-even means they make no money, but they also lose no money. So that final number (24,000) would be 0 instead. How many units would they have to make to hit zero? (x * 80) - (x * 32) - 72,000 = 0. 80x - 32x = 72,000 48x = 72,000 x = 1500 units
We can verify by using our first formula we've already determined, using this new value for units. (1,500* 80) - (1,500 * 32) - 72,000 = ? 120,000 - 48,000 - 72,000 = 0? True!
Question 2: If they increase their expenses by 16,000, what is their new break even point?
A relational orientation is a concept of marketing which is aimed at creating a relationship between the salesperson and the customer on a long term basis.
The concept identifies that when a long term relationship is created with the customer, it will bring about customer loyalty. A customer that is loyal will mostly buy or purchase goods or product from the salesperson.
Example of relational orientation is purchasing a car from a seller by the buyer due to the long term relationship already established. This type of arrangement is essentially good for products purchased in large quantities.
This combined process is called the market-related cost approach and is primarily used when valuing residential property The Valuation Process.
<h3>What is Valuation Process?</h3>
Analysts use valuation to determine the current or expected value of a stock, company, or asset. The goal of valuation is to appraise a security and compare its calculated worth to the current market price in order to identify promising investment possibilities.
The appraisal procedure starts when an appraiser finds the appraisal problem and finishes when they present their findings to you. Estimating market value is the most common appraisal assignment.
A valuation is used to assess the efficacy of your strategic decision-making process and to provide the opportunity to track performance in terms of expected change in value rather than just revenue.
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