Breakeven Analysis. Target Profit Calculation, Productivity Calculation Total 25 marks In all cases, you must show your work. Part marks given for answers only. Formula: Profit = Total Revenue Total Cost Breakeven Analysis - 5 Marks Marketing managers and managers involved in any facet of business, often use break-even analysis to analyze the relationship between total revenue and total cost to determine profitability at various levels of output. As the marketing manager for a small consumer electronics business, that has two locations, one in Victoria and another in Langford, use the breakeven formula to calculate: a. How many laptops you must sell per month at the Victoria location if your fixed costs are; rent ($15,000), utilities ($1500) and salaries ($10,500). The average selling price for all the different brands (Apple, Acer, HP, Lenovo, Toshiba to name some) of laptops is $699. The average unit variable costs (shipping, interest and cost of the unit) for each of the laptops is $549. b. How many tablets must be sold at the Langford location if the total fixed costs are $24000 (rent is lower), the average price per tablet is $449 and average unit variable costs per $329 ? c. What is the pricing tactic demonstrated with the selling prices of the laptops and tablets? Briefly state your reason. Target Profit Calculation - 10 marks Use the Cost-Plus Pricing formula Profit = Total Revenue Total Cost, =(PQ)[FC+(UVCQ)] You have decided that $50,000 per month is a reasonable amount of profit to make in total for the two stores. Combined they sell approximately 300 laptops and 300 tablets are sold per month. Presuming that the sales breakdown (ratio of laptops and tablets is equal) and that it does not matter from which store the profit is generated, calculate the price for laptops and for tablets that you must charge to make your target of $50,000 profit per month. Use the same fixed costs and average unit variable cost from the breakeven analysis. Be sure to show your work. Hint: Split the profit in half and calculate the selling price at each store presuming the Victoria location sold only laptops and the Langford location sold only tablets. Productivity Calculation - 10 marks You have just received the sales report for the Black Friday weekend sale. The figures are as follows: 1. Victoria location - 225 laptops sold @ an average price of $600,120 tablets sold @ an average price of $400. Total wages paid to the sales team were $1500. Fixed costs and average unit costs are: $2700,$540 (laptops), $320 (tablets) respectively 2. Langford location - 175 laptops sold @ an average price of $575,100 tablets sold @ an average price of $400. Total wages paid to the sales team were $1000. Fixed costs and average unit costs are; $2400,$520 (laptops), $300 (tablets) respectively. Using the unit variable costs as indicated at each location, calculate the productivity (to 4 decimal places) for each location and state which is most productive. Formulas: - Breakeven = Fixed Costs Price per Unit - Unit Variable Costs - Profit = Total Revenue Total Cost, =(PQ)[FC+(UVCQ)] P= Price, Q= Quantity, FC= Fixed Costs, UVC = Unit Variable Cost (Cost per unit) Productivity = Outputs / Inputs Outputs = All sales in units or revenue (output) generated as the result of your Inputs Inputs = All costs ($) incurred or other inputs used to generate your Output