ACC640 Week 1 Assignment Case Study

MEMORANDAM

TO: MANAGER

FROM: YOUR NAME

DATE: 9/10/2022

SUBJECT: CVP ANALYSIS FINDINGS

My finding was that the equipment was efficient enough to just be fully utilized, and that we had the ability to increase sales. I also mentioned that the C.M. R’s were a strong and positive sign product wise because they mean the companies have flexibility to generate higher profits with these products, which means more can be sold and sold at a higher profit margin. The target net profit C.M. R’s were also extremely positive because they mean the companies can make a substantial amount of profit from just one product alone, and that more can be sold at an even higher profit margin.

Since I discovered that the firm could make a lot of money off of these three goods, I think it would be a good idea to create a new website and platform for them. I believe that the birdhouse should be offered for retail purchase rather than wholesale, as retail sales would result in higher profits. In addition, there are a number of other companies that offer products that are comparable to yours, and these could either serve as competitors or as role models to help you develop a better understanding of how to market and sell your own products. Because I believe that it would be simple to produce more sales and more profits for this product if it were promoted in the appropriate manner, I would suggest that the porch swing be offered to the same kind of individuals as the hammock. The hammock should also be offered to the same markets as the porch swing, but it may also be a terrific complement to other locations that employ hammocks. Both of these products should be sold in the United States.

When looking at the contribution margin, one might get the impression that the business is operating well and that all of the goods are producing a respectable amount of profit. The target net profit C.M. R’s are high because they mean that three separate areas can generate a substantial amount of net profit with only one product each. This is a good thing because it means that all three products are successful in those areas and should continue expanding in those areas. In other words, the target net profit C.M. R’s are high.

As for the break­even point, they are all at a huge profit and should continue to grow in that direction, but the birdhouse stands out to me because it is extremely close to being a low cost, high profit product. It is right on the line of $500 in profit and $500 in losses, so if anything goes wrong the product could lose anywhere from a few thousand dollars to all of its profits. Something to note on the contribution margin ratio is that if these three products were sold to the public, then the porch swing would be the best product to sell due its low cost. I suggest selling it because it is a popular item, and if they are able to get it on display in other places then it will increase their sales greatly. The birdhouse and hammock should also be sold because they both have extremely low costs and high profit margins, so if they are able to get them on display in other places then they will have more opportunity for profit and sales.

As for the C.M. R’s ratio, I think that with all of these products being successful then there is nt much room for growth and improvement. Overall, I think that the products are profitable as well as effective at generating profits for the company.

Yours’s faithfully,

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