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Homework 2

1) Sharon Smith is sales manager of the KleenUp Company. Sharon intends to launch a monthly sales campaign during the coming year. She is currently preparing a budget for the labor costs required to handle the sales campaigns and has estimated that the first one will require 100 hours at a cost of £15 per hour. From previous experience, Sharon knows that the sales force’s learning experience follows a 78% learning curve. The KleenUp Company would like to know what the first four campaigns will cost.

The total time required for the first four campaigns, CUM4 = 306.3

Total costs = 306.3*£15=£4594.50

2) The MightyBig Company is considering three sites for the location of its new manufacturing plant. Annual estimated revenue along with fixed and variable costs for each site are shown in the Table. Sales volume is expected to be 30,000 units per year. Set up a cost-volume-profit model and hence find the best location using break-even analysis.

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Solution:

1 We need to find out BEP (Break Even Point) in Sales

BEP=300000/70-65=60000

BEP=500000/70-45=20000

BEP=700000/68-30=18421

2 Break-even Point in Sales Funds

A) 60000*70=4200000

B) 20000*70=1400000

C) 18421*68=1252628

|site location   |revenue per unit|fixed cost       |variable cost   |break even point(u)     |BEP(s)           |Corresponding   |
|                 |                 |(\$,000)         |per unit         |                         |                 |profit(loss)     |
|A               |70\$             |300\$             |65\$             |60000                   |4200000         |150000\$         |
|B               |70\$             |500             |45\$             |20000                   |1400000         |250000\$         |
|C               |68\$             |700             |30\$             |18421                   |1252628         |440000\$         |

Best side is C

• Submitted by: BoburUmurzakov1
• on December 4, 2013
• Length: 262 words
• Views: 154
• Popularity Rank: 493554
• 1 rating(s)

### Citations

##### MLA Citation

"Business". Anti Essays. 20 Feb. 2018