Break Even Analysis
The final area you have been asked to evaluate is related to the company’s feasibility to produce a new product, an ottoman. The management team wants to understand the quantity and sales needed for this product to be profitable. To determine this, you decide to conduct a break-even analysis to calculate the number of ottomans and the total sales needed for the company to break even. In Doc Sharing (https://waldenu.instructure.com/courses/135683/modules/items/5223462), your Instructor will provide you with a scenario for The Better Chair Company to use for this part of the Assignment.
To complete this part, address the following:
- Using the Week 5 Part 2 Assignment Template and the data provided by your Instructor in the Doc Sharing (https://waldenu.instructure.com/courses/135683/modules/items/5223462)_area, calculate the number of sales per month (i.e., the number of ottomans and total dollar amount) the company will need to make in order to break even.
- Note: In addition to submitting your work in Excel, include your calculations within your report by copying and pasting the information from Excel.
Synthesize the results of your calculations to determine the feasibility of the company to make a profit based on the sales & marketing projections and recommend solutions to the management team that would help to ensure profitability for the ottoman project. - Summarize how understanding and utilizing break even analysis can impact managerial decision making.
Refer to the Week 5 Assignment Rubric for specific grading elements and criteria. Your Instructor will use this grading rubric to assess your work.
The company plans to develop a new product: an ottoman with multiple storage compartments. The sales and marketing team has projected a demand of greater than 500 per month at a selling price of $95. The company estimates the variable cost of the ottoman at $45 with the total monthly fixed cost at $19,600.
Related: (Solution) WMBA 6050 Week 4 Transfer Pricing Assignment
Solution
The break-even analysis will help calculate the number of ottomans that need to be sold to cover all fixed and variable costs. This analysis can then inform the feasibility of producing the ottoman based on the sales and marketing projections.
…Please click on the Icon below to purchase the FULL ANSWER at only $10
Instant Download on Payment
