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Financial Calculations for a new hair care product - Assignment Example

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Financial Calculations for a new hair care product

And all the products have to pass through research along with the specific product development phases. Keeping in view these facts, the above table shows a list of assumptions made for the development of the hair care product. Moreover, these assumptions would serve as the baseline for calculating the revenue and costing of the product, marginal costing, sales / production basis and the break even analysis (Bernstein and Wild, 2000).Breakeven point Calculations:-
The breakeven analysis is utilized to determine the point in duration at which the revenues of the business becomes equivalent to the costs of the business. The following section of the document presents breakeven analysis of the hair care product
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Scientific research for the development of new hair care product is exceptionally costly and it can be difficult to manage for smaller companies. And all the products have to pass through research along with the specific product development phases. Keeping in view these facts, the above table shows a list of assumptions made for the development of the hair care product. Moreover, these assumptions would serve as the baseline for calculating the revenue and costing of the product, marginal costing, sales / production basis and the break even analysis (Bernstein and Wild, 2000). Task 2 Marginal Costing and Contribution Based on market research, it is expected that sales will be 10,000 units per month (Wood & Sangster, 2011). Per unit Sales 1,800,000 Less Marginal Cost of Sales Production Cost (Valued @ marginal Cost) ?607,739 Less Closing Stock (Valued @ marginal cost) ?92,310 Marginal Cost of Production ?515,429 Add Advertising expenses ?1000 Marginal Cost of Sales (516,429) Contribution ?1,283,571 Less Fixed Cost ?65,000 Marginal Costing Profit ?1,227,571 Marginal Cost Per Unit Total Output for the year 141,203 Total Variable Cost 607,742 Total Fixed Cost 66000 Per unit marginal cost= total variable cost divided by total output 607,739/141,203 ?4.304/Unit Task 3 Breakeven point Calculations:- The breakeven analysis is utilized to determine the point in duration at which the revenues of the business becomes equivalent to the costs of the business. The following section of the document presents breakeven analysis of the hair care product. The formula used for the breakeven analysis is as follows: Break even Sales = Fixed Cost Price – Variable cost Break even Sales = ?66000 / (? 1800000 - ? 607,739)/141203 Break even Sales = 7817 Units Breakeven level of ...Show more

Summary

Given below is the proposal / break-even analysis of a new product to be introduced to the market.The product is a herbal shampoo prepared from natural herbs to protect, nourish and nurture the scalp and make hair healthy, thick and lustrous…
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Financial Calculations for a new hair care product essay example
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