Question
Can you please help me rewrite this in the correct language and format. If the company increases its marketing budget, the volume needed to break-even
Can you please help me rewrite this in the correct language and format.
If the company increases its marketing budget, the volume needed to break-even will also increase. Even if the required break-even increases, the estimated sales of the company will also increase by 50% which is way more than the required increase in volume it needs to meet. The break-even volume needs to be increased by 45,977 units while the expected increase in sales is 50,000. If the company wants to maintain the initial monthly income of $25,000 as shown in the computations above, it only must increase its sales volume by sixty units from the current sales it has. Overall, the company is still expected to be profitable even with the changes in fixed cost.
Break-even analysis is the relationship between cost volume and profits at various levels of
activity, with an emphasis placed on the break-even point. This point is where the business
receives neither a profit nor a loss, when total money received from sales is equal to total money
spent to produce the items for sale (Chand, 2021). It is a particularly important and useful tool for financial management and control.
With an increase of advertisement expenses, the break-even point has increased, but this has also changed the sales volume.The break-even point before the change is 583,333 unitswhile after the change it is already 629,310 units. The break-even volume increases by 45,977 units. This increase in break-even is due to the increase in fixed costs and the increase in variable costs. Even with these certain increases, the sales volume is also expected to increase by 50% (50,000 units) which is above the required increase of 45,977 units. The company should push through with the change since this can help the company become more profitable.
Analysis (2 pages)
Break-even analysis is the relationship between cost volume and profits at various levels of
activity, with an emphasis placed on the break-even point. This point is where the business
receives neither a profit nor a loss, when total money received from sales is equal to total money
spent to produce the items for sale (Chand, 2021). It is an especially important and useful tool for
financial management and control.
Some of the advantages of the break-even analysis enables a business to measure profit and
losses at various levels of production and sales. It predicts the effect of changes in sales prices,
analyze the relationship between fixed and variable cost and it can predict the effect of cost and
efficiency changes on profitability.
Some of the disadvantages of the break-even analysis assumes that sale prices are constant at
all levels of output. There is also an assumption that the production and sales are the same. Break
even charts may be time consuming to prepare and it can only apply to a specific product for the
analysis
The "What if?" analyses to evaluate alternatives like the Advertising Director proposal. The pros of going with her advertisement proposal is that they have apotential of making a lot more for the month from a $1500.00 investment. For that $1500.00 investment we have the potential to make around $48,000.00 more then we normally would make in a month. A con for this decision would be the increase labor cost due to more production is required.
The company should make the change. Considering that there is only a forty-six pair of shoes
difference to potentially make about $50,000 in sales is a great chance of being able to break
even. Especially when we on average sell about 1,000 pair per month
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