low-cost, high volume strategy. The strategy aims at customer satisfaction through low prices and relatively good customer service. Here are the basic details. • Low cost: Wal-Mart has lower operating expenses than the industry average. The primary cost advantage is Wal-Mart’s superior distribution capability (location of stores, inside-out growth patterns, cross-docking, superior information management). Quantitative details on cost advantage are set forth in Section 3 below. • High Volume: Industry
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the pressure to meet and exceed customer expectations, companies should also be measuring the cost to serve each customer and the profits earned, customer by customer. 6-2 Examples of differences between customers who have high and low costs-to-serve may be drawn from the chapter’s Exhibit 6-1, part of which appears below. |High Cost-to-Serve Customers |Low Cost-to-Serve Customers | |Order custom products
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Case #2 – Performance Drinks: Applying Activity Based Costing Taylor Goodwine Davenport University December 11, 2015 1. Cost-Driver Rate= AC/AV (Ex: 22,500/85=264.70) Particular | Amount | Equipment Set Ups | Production Runs | Number of Products | Machine-Hour Capacity | Indirect Labor | $55,000 | $11,000 | $24,750 | $8,250 | $11,000 | Fringe Benefits on Indirect Labor | $24,750 | 4950 | 11,138 | 3,713 | 4,950 | Utilities | $5000 | 250 | 3,250 | - | 1,500 | Processing Equipment
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nurses’ services at $40 per hour, for a total cost of $40,000. It was expected that these nurses would administer 400 flu shots and treat 1,600 flu patients. The medical group typically charges $50 for a flu shot and $80 for treating a flu patient. Actually, the group had 1,200 patients who received the flu shot and 1,400 who had the flu and received treatment. On average, it was able to collect $55 per flu shot and $70 per flu patient. Compute the volume, mix, and price revenue variances. How did things
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term ‘leverage’ is used to describe the firm’s ability to use fixed cost assets or funds to increase the return to its owners; i.e. equity shareholders. In other words, the fixed cost funds i.e. debentures & preference share capital act as the fulcrum , which assist the lever i.e. the firm to lift i.e. to increase the earnings of its owner i.e. the equity shareholders. If earnings less the variable costs exceed the fixed costs i.e. preference dividend & interest on debenture, or earnings before
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the end of the four year period from my previous time discussions. Finally we can make a detailed discussion and analysis of the data using CVP analysis, and will explain why I recommend specific pricing and research and development (R&D) costs for the next four year period. The Clipboard Tablet Company is currently making three different tablet models; the X5, X6 and X7. The X5 has been on the market for three years already and market research has determined that consumers are
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SLMB100 Marketing Concepts Assignment 1 Marketing Mix Report INTRODUCTION Organisations today operate in a dynamic and uncertain economy within a greater competitive environment. To remain profitable, organisations must implement a marketing orientation strategy whereby all business decisions are centered on delivering customer satisfaction. This strategy emphasizes the importance of understanding the identified key audience, their needs, wants and desires to effectively create and position
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your noble cause. Although the company is working effectively, it is not able to generate reasonable amount of profits. The profits it will generate in next year are also very small. But they can be increased if certain measures are taken and a check is kept on some factors which lead to decrease in profits. The company is appearing to be barely in breakeven, which indicates lower profits. The weighted average contribution margin percentage for the next year is 70% and the breakeven dollar sales for
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$48 = $68 Total fixed costs = $500,000 CM per unit 68 = 7353 composite units Leo 7,353 5 = 36,765 units @ $10 = $367,650 Libra 7,353 8 = 58,824 units @ $15 = $882,360 Or alternatively, the average contribution margin could be calculated. Note it is 40% for both products, as follows: Leo $4 5/13 = $1.54 Libra $6 8/13 = $3.69 Average contribution margin $5.23 Total fixed costs = $500,000 C/M p.u $5.23 = 95,602 units ACC00146 Topic 2 – Cost-volume-profit (CVP) analysis 49 Leo
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Section 11/27/2014 A. Pricing Strategy Orange’s pricing strategy involves higher volumes as a result of lower profit margins in the ‘lower’ segment. This is shown in the table below where the ‘upper’ segment represents 84% of the total profit and the ‘lower’ segment represents 16% of the total profit. There are pros and cons to their pricing strategy. A pro of the pricing strategy is the increasing sales volume will allow the opportunity to increase customers, and therefore increase market share
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