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Using CVP Analysis to Inform the Pricing/CVP Calculator

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Simulation

Requesting help with understanding the use of CVP analysis to inform the pricing of 3 products in order for me to be able to write a discussion paper.

SCENARIO CONTINUATION:

You've now completed part 2 , and it the date is (once again) January 1, 2016.
You turn on the TV, and once again, the local television news anchor is talking about events that occurred on January 1, 2012.
Your decision-making process will be different this time, as you will be using CVP analysis, a technique with which you recently became familiar.You analyze the results of the decisions you made in SLP2. But this time, you aim to improve your Final Total Score by using the CVP Calculator to help you determine a new and improved strategy.
(I have attached part 1&2)
You analyze your SLP2 results using CVP and develop your complete four-year strategy, again taking notes, documenting your reasoning.You finish the report that shows your revised strategy for the next four years.Do not run the simulation yet! Simply do the written report.
in 6- to 7-page can you help me in which you use the results from SLP2 and CVP analysis to develop a revised strategy.

1.The revised strategy should consist of the Prices, R&D Allocation %, and any product discontinuations for the X5, X6, and X7 tablets for each of the four years: 2012, 2013, 2014, and 2015.
2.present a rational justification for this strategy. In other words, provide clear and logical support for your proposed strategy using financial analysis and relevant business theories.
3.You need to crunch some numbers (CVP Analysis) to help you determine your prices and R&D allocations.
5.Make sure all of your proposed changes are firmly grounded in CVP analysis, on the financial and market data provided you, and on sound business principles.
6.Present your analysis professionally, making strategic use of tables, charts, and graphs.

1st Scenario
•2015: Hired on December 15.
•Turned first report in to Sally on December 30th.

2nd Scenario
•Time Warp 1 begins: January 1, 2016 warps into January 1, 2012.
•You realize you have to make decisions for 2012 - 2015, which you do.
•December 31, 2015 - You have gone through all four years, and you write your report to summarize how you did.

this Scenario•Despite your efforts in SLP2, you are once again taken back to January 1, 2012. You decide to use CVP analysis to revise the four-year plan you developed in SLP2. You analyze the results of your decisions from SLP2, taking detailed notes. You use the CVP Calculator to help develop your revised strategy, taking additional notes explaining the logic your decisions.

You might find these downloads and readings useful:

CVP Calculator- This an Excel-based calculator that you can use to determine prices, volumes, and profits. Keep in mind that it will tell you what need, but the market determines what you actually get.

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Solution Summary

This solution of 1610 words contains step-by-step calculations to determine prices, volumes and profits. References used are included.

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The Response addresses the query posted in 1610 words with APA References

//Cost Volume Profit method is a better tool to evaluate the impact of pricing and other costs on the profitability of the company by considering the minimum level of sales needed to avoid loss. Clipboard Tablet Company has three products that need to be evaluated for pricing and research and development expense (R&D) strategy in order to improve the overall profitability of the company. In the next paragraphs, we will explore the products performance of the company in 2012 regarding pricing and R&D expense strategies in order to improve the overall performance of the company.//
X5 and X6 are in the growth phase that means there is a need to increase the R&D expenses in order to increase additional features in the products so the demand in the market can be increased. The strategy, on the basis of CVP, is clear to increase the R&D expenditure in respect of X5 and X6 for 2012 only. If there is an increase in the demand, there will be further increase for future periods. The strategy in 2012 regarding price of the products will be different for both the products. There is no increase in the price of X5, whereas there is an increase in the price of X6 because it is not price sensitive.
During 2012, there will be an increase in the R&D expenditure for both X5 and X6 because both are in he growth phase and can entail increased demand because of additional features before the customers. The strategy for 2013, 2014, and 2015 will be dependent on the CVP results of both the products regarding total revenue. There is a slight increase in the price of X6, whereas there is no change in the price of X5 because it is price sensitive that means increase in the price can result in reduction in the overall revenue of the company. X7 should be developed in 2012 because this product takes significant time to be profitable for the company. There is an elimination of R&D expenses and price strategy for X7 during 2012.
Year 2012
The price of X5 is $285 because there is no change in the price of the product due to its price sensitivity to the customers' demand. There is an increase in the price of X6 and the price for 2012 of the product is $470. The cost of R&D has increased by 45% of the price in order to improve the existing features ...

Solution provided by:
Ashish Sharma, MBA (IP)
Education
  • MBA (IP), International Center for Internationa Business
  • BBA, University of Rajasthan
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