Question 1 Annual fixed cost: $950 million Variable cost per plane: $45 million Q1 Break-even point in unit= $950 million $25 million Break-even point in unit= 38 units Break-even point in sale dollars= $950 million $25 million $70 million Break-even point in sale dollars= $950 million 0.357 Break-even point in sale dollars= $ 2660 Million Q2 -------------------------------------------------
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management and management accountants. It is based on categorizing production costs between those which are "variable" (costs that change when the production output changes) and those that are "fixed" (costs not directly related to the volume of production). Total variable and fixed costs are compared with sales revenue in order to determine the level of sales volume, sales value or production at which the business makes neither a profit nor a loss (the "break-even point"). The Break-Even Chart In its simplest
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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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Havard Business SCHOOL PAPER: Universal Car Rental Pricing Simulation July 2012 Universal Car Rental Pricing Simulation Background: The objective of the simulation was to maximise profits of Universal Car Rental Company. The simulation was run across three cities in Florida; Tampa, Orlando and Miami. Overall strategy: We adopted a strategy of offering the highest price achievable whilst maintaining 100% capacity utilisation irrespective of market share. In the context of the scenario
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pairs in this region.” The numbers already in these columns when you first come to the screen are the decisions your company made last year and represent the competitive marketing effort your company employed to achieve last year’s branded sales volumes and market shares in each geographic region. • Your entries in the four columns headed “Your Estimate of the Industry Average” represent your best “guestimates” of what level of competitive effort your company will be up against in the upcoming year
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expenditure. The estimated production costs for each of the two methods of manufacture, together with the additional marketing and distribution costs of selling the new magazine, are summarised below: Method A Method B Variable costs 55p per copy 50p per copy Specific fixed costs £80,000 per £120,000 per month month In addition to the variable and specific fixed costs, semi-variable costs are expected to be incurred as follows: Semi-variable costs: Method A Method B 350,000
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conditions, Lilly management decided to establish a set of company-wide goals that focused on improving time to market for its products in development and a reduction of manufacturing costs. Specifically, these goals were: 1. Reduced new product time to market by 50% from the current 8 -12 year process 2. Reduce the cost of manufacturing by (25%) The key to achieving these goals was Mueller’s decision of what kind of manufacturing facilities should be used to produce the new products. This equated
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Medical Center 1.) What is the marginal cost estimate of the Phase 4 hospital services, assuming that 60 percent of the designated costs are fixed and the remaining costs are variable? * The Marginal cost estimate is $ 71,468 2.) What is the ‘relevant range’ for the cost structure? In other words, at what volume might you expect the fixed and variable costs to change appreciably? * The current amount of patients treated for liver transplant volume totaled 120 patients annually, with a reimbursement
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keep prices low always and in order to do that, Wal-Mart had to minimize its cost effectively. To minimize their cost, Wal-Mart implemented the following: Each store manager used information system (traiting) to find customer preferences and displayed products in the most appropriate places. They could price products to meet their various demands in order to maximize sales volume and minimize inventory turnover and cost. Using Electronic Scanning (UPC) and satellite system, they could improve
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Distribution Channels Case Study Assigned by 1 Target market are Women, Married or in a relationship, between age of 21-45, socioeconomic group A, and located eastern South. Target market can be further segmented according to age, working status, weather or season. Moreover married men are also potential customers as they would buy the product as a gift. Special gift packaging would be attractive, maybe a non-polished, light in colour wooden box containing an organic irregular Loofa textured
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