3. Return to the break-even analysis below that you used for the Break-Even Anal

Question

3. Return to the break-even analysis below that you used for the Break-Even Analysis Assignment below Increase the sales or service units by 25% from the number that you indicated in the Break-Even Analysis Assignment. All info below.

HOW MANY UNITS DO I NEED TO SELL TO BREAKEVEN? Dale: November 8, 2017 INTRODUCTION Given your profit margin, it is important to know how many units of a certain product that you will need to sellin order to cover your fixed/istartup costs Use this calculator to determine the number of units required to you couild make on your anticipated sales volume. plus the potential prolt ANALYSIS You would need to sell 14 units in order to cover your fixed costs. f you sell your antioipated 2,000 units then your profitloss would be $278,000. Unit Sales Breakeven Analysis $1.200 2 23 2 32 Units Sold Fixed Costs Sales Revenues Total Operating Costs Units Soled Sales Revenues Variable Costs Fixed Costs Operating Profit $2,000 2,000 2,000 2,000 2.000 2,000 2,000 2,000 2,000 $2,000 $-2,000 -1,500 1,000 571 1,143 1,714 2,286 2,857 3,429 71 10 14 17 21 214 357 500 571 $643 1,000 1,500 2,000 4,571 $5,143 32 SUMMARY OF INPUT stbaton The caculadons do not iner hat the company assomes any Svciary duoes The calulations provided should not be cosued asnciat ngal o

Explanation / Answer

1. under full cost pricing stragey, firms consider total costs (fixed cost+ variable cost and other costs) and prepare their plans for pricing the product. here the total cost is base for pricing and on the total cost, they charge some profit and fix price to the product. the total cost will be measured and divides with the total units output and fixed the price.

here the element of fixed cost is left over and considere only the variable cost for production. in marginal costing process, the additional variable cost will be considered to produce extra unit of output and based on it the price will be fix for the product. the best thing about this is, the products will be offered at lower cost to the consumers.

2. even in healthcare business also, marginal costing method is good. because the demand for the sevices are more when we implement marginal pricing, where it will be much lesser in total cost pricing. when the demand is lesser, the revenues also be less, which takes much time to recover the firm. if they follows marginal cost pricing, the demand for services will be more and it can be recover its costs and helps to get good brand name in the market to the healthcare organization.

3. if we increase the service level by 25%, first we need to increase the number of doctors, rooms, nurces and medicine availability. where all these are available, then only it can be possible to increase the service levels.

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