Cost-price-total revenue and quantity changes, Managerial Accounting

Quasar Computers are the first all optical notebooks and their profit largely affects the manipulations in cost, price, total revenue and quantity changes. The market analysis showed that though it was a revolutionary product yet it was not very popular and thus was not a highest selling product as expected. In order to get maximum profit it is imperative that the company should follow specific strategic implementations so that they do not face the situation of loss. As predicted by the financial assessment head of the company Jane Sarandon, if the price of the product is a minimum of $1,950 then there will be profit of approximately .25%, as keeping the cost of the product high might not cater to a wide range of consumers but will attract some of the niche customers who are fond of new technology and innovation.

Another aspect of this analysis also states that if we decrease the cost there isn't a probability that the sales will increase, as higher price is not a deterrent in the number of products sold. Even when we have a decent 7 million units sold all over the country the company is going to get its expenditure paid off and a little profit also, this appears to be a substantial figure so effective strategy is to have higher price and have profit rather than decreasing the price and going into loss as the product appeals to a niche consumers and is not of much significance if the company decrease the price to cater to a larger group of consumers.

Technological head David Pinto says that he has designed this product keeping in mind the avid computer fans and so there is a probability that the product does not suit to the normal regular buyer looking for a simple computing machine, the total cost spent on its making is also considerable so it will not be of any benefit to decrease its cost, that will only result in loss. Technological advances were technical and typical of a certain well versed consumers of the product.

Marketing head Robert Spencer estimated the total cost to be $ 13.39 billion and the total revenues generated as $ 13.7 billion which just makes a marginal profit and thus according to him a $1,950 - $2,000 is a right price for the product as it is not too much expensive comparing to the other brands in the market. His research suggested that people who are technologically a little advance and computer savvy are the ones who can afford this price as it might not be a favorable price for the general public who use a notebook for less professional purposes. So, this product is said to be crafted for people who can understand its value for its technological innovation and have a value for price as well.

Marketing Consultant, gave an estimation of the various attributes associated with this product on the basis of the above mentioned data. Its marginal cost dropped to a certain point and then increased up to $ 2,200 for approximately 1 million units. Although demand decreases as it is a narrow range product but the average total cost stabilized at this level to around $ 2,000. Marginal revenue also dropped from $ 3,600 as the figures reached close to 7 million units. The analysis showed that Quasar Computers can have profit only when it keeps its new optical product a little more pricy from the normal contemporary range and it is designed to cater consumers of a definite taste and profession. This was a product which has a drop in marginal revenue as well as in market demand still the individual price of the product was substantial to maintain the growth phase, may be not a drastic growth but still a minimum profit is maintained through it which was not possible, had the company tried the strategy of decreasing the price as a common marketing norm to increase the sales.

Posted Date: 3/8/2013 12:03:13 AM | Location : United States







Related Discussions:- Cost-price-total revenue and quantity changes, Assignment Help, Ask Question on Cost-price-total revenue and quantity changes, Get Answer, Expert's Help, Cost-price-total revenue and quantity changes Discussions

Write discussion on Cost-price-total revenue and quantity changes
Your posts are moderated
Related Questions
What are the Advantages or uses of break even charts Computation of break even point or presentation of cost volume and profit relationship by way of break even charts has the


VALUE ADDED STATEMENTS Are intended to show how much wealth or value has been created by the company’s operations and how the wealth has been shared out to interested groups e.

Responsibility Accounting This is a term used to define the measuring of performance of decentralized units, using account results. Responsibility accounting recognizes various


What does it mean when we say consistency is the central feature of economic rationality?

Issa Company manufactures a personal computer designed for use in schools and markets it under its own label. Issa has the capacity to produce 25000 units a year but is currently p

At the starting of the year, Asquith Company Ltd initiated a quality improvement program. The program was successful in decreasing scrap and rework costs. To help assess the impact

Explain Management accounting Meaning & definition: Management accounting is comprises of two words, Management and accounting. It is the study of managerial aspect of the ac

Steps of Graphic Analysis There are four steps in using graph paper to study cost-volume relationships: Step 1: Compute the scale which you will use: Volume is considered