Multiple-Level Break-Even Analysis Nielsen Associates provides marketing service

Question

Multiple-Level Break-Even Analysis Nielsen Associates provides marketing services for a number of small manufact, percent of sales. Operating costs are as follows: Unit-level costs Sales-level costs Customer-level costs $800 per customer per year Facility-level costs firms. Nielsen receives a commission s0.02 per sales dollar 200 per sales order $60,000 per year (a) Determine the minimum order size in sales dollars for Nielsen to break even on an order. s 2,500 ming an average customer places five orders per year, determine the minimum annual sales required to break (b) Assu a customer. $ 10,000 (c) What is the average order size in (b)? s 2,200 x (d) Assuming Nielsen currently serves 100 customers, with each placing an average of five orders per year, determine the minimum annual sales required to break even. s 244,898x (e) What is the average order size in (d)? : $ 15,000

Explanation / Answer

b) Minimum Annual Sales required to break even a customer - (($200*5)+$800)/(0.10-0.02) 1000+800/0.08 22500 Minimum Annual Sales required to break even a customer $22,500 c) What is the average order size in b Average order size - 22500/5 4500 d) Annual sales required to break even (200*5*100)+(800*100)+60000/(0.10-0.02) ((100000)+(80000)+(60000))/0.08 240000/0.08 3000000 Annual sales required to break even $3,000,000 e) Average order size in d 3000000/(5*100) 6000

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