Question

Throughout the New Shoes Simulation you will have to evaluate your previous decisions as well as other Market data and information in order to make an informed decision for the current period. The break even analysis is a tool that can assist in setting the price for your athletic shoe during the various decision periods. Based on the market data and information presented in the simulation determine the break even analysis for your New Shoes company and the correlation to your shoe pricing strategy. Keep in mind that to calculate the break even analysis you can use the following formula: Break Even Price=variable cost (the unit cost of the product) + fixed expenses (marketing expenses and allocated product development expenses) /projected units. Having calculated the Break Even Analysis what will you have to price your shoes in order to reach your target run? In addition, provide an assessment of other elements that should be considered in addition to the break even analysis to the determine the price of your shoes. Research and find an organization that has been challenged with setting prices for their products or services and share how they addressed the issues. Be sure to use appropriate grammar/spelling, and cite all sources in APA format. Initial posts are due by Wednesday of each week. At least two secondary posts to colleagues is due by Sunday of that week. Posts should be distributed over three or four separate days. The initial post should be a minimum of 250 words. Secondary posts should be a minimum of 100 words.

Answer 1

break even analysis helps you to find the volume of production to be stands at no profit and no loss to the firm. in the same way, at which production level you will get profits or at a desired profit level how much volume production must be there. with the information, you can modified in the value of selling price of a given product, or how the fixed cost and variable costs are inpacting on the firm and so on.

for example, i want to start a bakery to produce buns and pufs, the fixed cost for all infrastructure is $10,000 and variable cost for material and labor per unit is $1, where i wish to sell the product at $2 per each. then my required volume of output to be stands at break even is

fixed cost= $10,000

selling price= $2

and variable cost is $1 per unit

BEP= Fixed cost/ selling price- variable cost

= 10,000/2-1= 10000 units prodution requires to be stands at BEP.

If i need the profit of $1000, then the BEP will calculated by

= fixed cost+ desired profit/ selling price- variable cost