Your health care business is beginning to take shape. You’ve chosen products or
ID: 2568479 • Letter: Y
Question
Your health care business is beginning to take shape. You’ve chosen products or services to offer, come up with a business model, and looked at your fixed and variable costs. Now you have to decide how to set your prices. For this assignment, determine your prices and when you will make a profit. Be sure to answer the following questions for the health care business that you are creating in this class: Return to the break-even analysis tool that you used for the Break-Even Analysis Assignment. Increase the sales or service units by 25% from the number that you indicated in the Break-Even Analysis Assignment. Picture below3. Write a summary of how this affected your health care business. What departments did you have to make changes in? What did this do to your fixed or variable costs? Be specific. Upload your revised PDF break-even analysis tool to show that you have increased the sales or services units by 25%. Your health care business is beginning to take shape. You’ve chosen products or services to offer, come up with a business model, and looked at your fixed and variable costs. Now you have to decide how to set your prices. For this assignment, determine your prices and when you will make a profit. Be sure to answer the following questions for the health care business that you are creating in this class: Return to the break-even analysis tool that you used for the Break-Even Analysis Assignment. Increase the sales or service units by 25% from the number that you indicated in the Break-Even Analysis Assignment. Picture below
3. Write a summary of how this affected your health care business. What departments did you have to make changes in? What did this do to your fixed or variable costs? Be specific. Upload your revised PDF break-even analysis tool to show that you have increased the sales or services units by 25%. Your health care business is beginning to take shape. You’ve chosen products or services to offer, come up with a business model, and looked at your fixed and variable costs. Now you have to decide how to set your prices. For this assignment, determine your prices and when you will make a profit. Be sure to answer the following questions for the health care business that you are creating in this class: Return to the break-even analysis tool that you used for the Break-Even Analysis Assignment. Increase the sales or service units by 25% from the number that you indicated in the Break-Even Analysis Assignment. Picture below
3. Write a summary of how this affected your health care business. What departments did you have to make changes in? What did this do to your fixed or variable costs? Be specific. Upload your revised PDF break-even analysis tool to show that you have increased the sales or services units by 25%. HOW MANY UNITS DO I NEED TO SELL TO BREAKEVEN Date: November 10. 2017 200px by 50pm Given your profit margin, it is important to know how many units of a certain product that you will noed to sell in crder to cover your fixed/startup costs. Use this calculator to determine the number of units required to breakeven plus the potential proft you could make on your anicpated sales volume. ANALYSIS You would need to sell 1,637 units in oeder to cover your fixed costs It you sell your anticipated 1,000 units then your profitloss would be $-118,250 Unit Sales Breakeven Analysis Units Sel Roed Costs Total Operating Costs Units Sold Sales Revenues Variable Costs Fixed Costs Operating Profit 303,750 S-303,750 227,812 -151,875 76.756 818 1637 2046 2456 230 269 307 025 383. 781 303, 5.937 151.875 227.812 303 750 537 294 303. 3274 $303, SUMMARY OF INPUT your goals and tnanoa
Explanation / Answer
Answer
Scenario 1 : Increase in Sales Units by 25%, with same Sales price
Anticipated unit sales = 1000
Increased Unit Sales = 1000 * 125% = 1250
Total Fixed Cost
303750
Variable cost per unit
2
Sales price
188
Anticipated unit sales
1250
Total Sales
188*1250
235000
Total Variable Cost
2*1250
2500
Contribution
Sales - VC
232500
Total Fixed Cost
303750
Operating Profit
-71250
Contribution Per unit = 188 – 2 = 186
Break Even Point = Fixed Cost / Contribution per unit
= 303750 / 186
= 1633 units (1637 units - approximately)
Break Even Analysis –
Units Sold
Sales Revenue
Variable Cost
Fixed Cost
Operating Profit
0
0
0
303750
-303750
409
76892
818
303750
-227676
818
153784
1636
303750
-151602
1228
230864
2456
303750
-75342
1637
307756
3274
303750
0
2046
384648
4092
303750
76806
2456
461728
4912
303750
153066
2865
538620
5730
303750
229140
3274
615512
6548
303750
305214
3684
692592
7368
303750
381474
Conclusion : incase the unit sales is increased by 25 %, there will be no change in the Break Even Point and the firm will have to sell the same 1637 units ( approximately) to cover its total fixed cost.
At the increased sales units of 1250, the firm will incur a loss of $ 71,250.
There will be no change in total fixed cost. The Variable will be $2500.
Scenario 2: Increase in Sales price by 25%, with same sales units.
Total Fixed Cost
303750
Variable cost per unit
2
Sales price (188*125%)
235
Anticipated unit sales
1000
Total Sales
235*1000
235000
Total Variable Cost
2*1000
2000
Contribution
Sales - VC
233000
Total Fixed Cost
303750
Operating Profit
-70750
Contribution Per unit = 235 – 2 = 233
Break Even Point = Fixed Cost / Contribution per unit
= 303750 / 235
= 1304 units
Break Even Analysis –
Units Sold
Sales Revenue
Variable Cost
Fixed Cost
Operating Profit
0
0
0
303750
-303750
409
96115
818
303750
-208453
818
192230
1636
303750
-113156
1304
306440
2608
303750
0
1637
384695
3274
303750
77671
2046
480810
4092
303750
172968
2456
577160
4912
303750
268498
2865
673275
5730
303750
363795
3274
769390
6548
303750
459092
3684
865740
7368
303750
554622
Conclusion : Incase the Sales price per unit is increased by 25 %, the break Even Point will decrease by 333 units (1637 units – 1304 units) . The firm will have to sell only 1304 units to cover its total Fixed cost.
At the increase Sales Price of $ 235 per unit, the firm will incur a loss of $ 70,750.
There will be no change in the total fixed cost. The variable cost will decrease by $500.
Note : as per the language of the question I am assuming that there can be two scenarios, first increase in sales unit and second increase in sales price.
Total Fixed Cost
303750
Variable cost per unit
2
Sales price
188
Anticipated unit sales
1250
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