Cost of sales per unit in Australia
1. Comparative analysis of before and after analysis of the cost and revenues of Teaser Malts:
As per Manchester, J. (2012), it is said that the alteration in the cost of sales per unit in the region of Australia have influenced the cost in the financial sheet of Teaser Malts. Apart from this, the decision upon decreasing the retailing price of the unit of chocolate with $ 0.40 may increase the customers and may give a good competition to the competitors in the market. As the availability of the direct competitor, Chocko Balls in the market who is giving enormous discount in its products have affected the marketing of Teaser Malts.
Teaser Malts have predicted the saving in the prime cost of $0.25, which have enabled the company to work over the production of the chocolates with the prime cost of $ 1. Keeping all the factors in considerations, the increase in the total sales have been predicted as 25% that is 15 million in the year 2014 (McLoughlin and Aaker, 2010).
In the case of increase in the cost of the manufacturing per unit due to the savings encouraged in the segment of prime cost and deduction of price in the retailing segment of the product, have enhanced the sales of the products with million. In the case of logistic cost, it has also been affected in the operation of the production (Hawkins, 2014, p. 112). In order to maintain sustainability in the market, the logistics cost may increase to enhance customer satisfaction and to provide them better service quality as compared to Chocko Balls.
|
Before and After Budget |
||||
|
In million |
||||
|
Total Sales (50 pack units) |
60 |
|||
|
Increase in the sales |
15 |
|||
|
New total Sales (50 pack units) |
75 |
|||
|
In $ |
||||
|
Retail Price per unit |
$4.95 |
|||
|
Reduction in cost |
($0.40) |
|||
|
New Retail Price |
$4.55 |
|||
|
Prime Cost incurred |
$1.25 |
|||
|
Predicted savings |
($0.25) |
|||
|
New Prime Cost |
$1.00 |
Table 1: Before and after Budget
(Source: created by author)
2. Alteration in the Teaser malts and Chocko Balls
As per the assumption in the total sales per unit volume of Chocko Balls, the valuation of the sales is assumed as 60 m in the initial stage for both the companies in the market.
|
Comparison of the sales in Chocko Balls and Teaser Malts for the year 2015 |
|||||||
|
Teaser Malts (m) |
Chocko Balls (m) |
||||||
|
Volume of Sales |
60 |
60 |
|||||
|
Increase and decrease |
45 |
-45 |
|||||
|
Sales in 2015 |
105 |
15 |
|||||
|
Current cost of sales per unit |
$3.10 |
$3.00 |
|||||
|
Increase and decrease in total unit cost |
$2.32 |
($2.25) |
|||||
|
Total unit cost in the year 2015 |
$5.42 |
$0.75 |
Table 2: Calculation of drop in sales of Chocko Balls as compared to Teaser Malts in the year 2015
(Source: created by author)
As per Stefano and Freitas (2014, p. 56), the assumption that the logistic cost and manufacturing cost of Chocko balls and teaser Malts, it is ascertained that the strategy adopted by Teaser Malt to attract back the customer by decreasing the valuation of the chocolate balls have lead to downfall of Chocko Balls sales with an assumption downfall of 75%.
3. Report upon the Strategic Management Committee as per the findings
As per the research carried out upon the two companies manufacturing and marketing identical products and are in direct competition in the market, the analysing of their financial records as per there business in the year 2014 and 2015 respectively is shown in the research. It also related the alteration made in the operation of the both the companies if any changes in the strategy of marketing and production is made in the cases (Wei, 2014, p. 5085). The alteration in the discounts offered in the chocolate balls and strategies implemented have brought about critical effect upon the competitive company ultimately increasing or decreasing the sales.
- As per the findings in the current section of the research, the cost of the unit sales in Teaser Malts decreased in the year 2014, but increased in the year 2015 with the changes in the strategy of business.
- As per the calculation of the assumed cost of Chocko Balls for the year 2015, it is ascertained that the change in the strategy of Teaser Malts. This has lead to downfall of the sales of Chocko Balls enormously with 75% in the cost of the total sales and drop in the sales of per unit of the product cost (Xiao et al. 2014, p. 927).
- In the case of Teaser Malts, the changes in the plans must be carried out until the business attains stability in the market. On the other hand, the strategies implemented in the case of Chocko Balls have failed due to which the company have suffered loss in the competitive market.
1. Calculation of 5 years budget
Prediction of total sales increase in the year 2014
|
Duration of years |
1st Year |
2nd year |
3rd year |
4th year |
5th year |
||
|
Sales |
$10,497,000 |
10811910 |
11136267 |
11470355 |
11814466 |
||
|
Production |
67,500,000 |
68,500,000 |
69,500,000 |
70,500,000 |
71,500,000 |
||
|
Purchase |
1080000 |
1160000 |
1210000 |
1260000 |
1320000 |
||
|
Cost of Goods Manufactured |
25, 00, 000 |
30, 00, 000 |
35, 00, 000 |
4, 00, 000 |
45,00,000 |
Table 3: Calculations of Overheads of New Moon
(Source: created by author)
2. Impact of sales and profit
According to the ascertainment of the data and the calculation upon the data given i is analysed that the company will suffer consistent profit in the next five years with an evolving sales unit every year. The profit will be increasing at the percentage of 35 till 10 years after which the arte of profit may fall due to intensive market competition.
3. Report to the CEO of ‘Cat‘n’Kitty’
As per the assessment of the result extracted in the case of calculation made, the production facility must be enhanced to improve the productivity of the company and to increase the quantity of production and quality of the products manufactured. As per the assessment over the next 5 years of the sales, it is observed that company will be suffering profit as per its product life in the near future.
1. Calculations of Overheads of New Moon
(i) Gross Profit per unit = Gross sales – Cost of goods sold
Therefore Gross profit = $ (300– 120)
= $ 180
(ii) Gross Profit margin ($GP/$Sales) = Gross Profit/total Revenue
= $ 180, 00,000/3, 00, 00,000
= 0.6
(iii) Total Gross Profit per Model:-
As per the research of the standard model, the calculation with the data is calculated below:
Standard model = (100,000*300) – (120*100,000)
= $ (3, 00, 00,000 – 1, 20, 00,000)
= $ 1, 80, 00,000
The Eco-Green Model is initiated with the data ascertained below with reference to the working of Jupiter Company in the segment of selling the equipments of greenery (Ritsumei.ac.jp, 2015).
Eco-Green Model = (10,000*450) – (180*10,000)
= $ 45, 00,000 – $ 18, 00,000
= $ 27, 00, 000
(iv) Total Firm’s Gross Profit = Total Revenue – Total cost of goods sold
= $3, 00, 00,000 – $1,200
= $ 2, 99, 98, 800
|
Gross Profit per unit = Gross sales – Cost of goods sold |
||
|
Gross sales |
$300 |
|
|
Cost of goods sold |
($120) |
|
|
Gross profit Per Unit |
$180 |
|
|
Gross Profit margin ($GP/$Sales) = Gross Profit/total Revenue |
||
|
Gross profit |
$ 180, 00,000 |
|
|
Total Revenue |
$ 3, 00, 00,000 |
|
|
Gross Profit margin |
$ 180, 00,000/ $ 3, 00, 00, 000 |
|
|
0.6 |
||
|
Total Gross Profit per Model |
||
|
Standard model |
(100,000*300) – (120*100,000) |
|
|
$ (3, 00, 00,000 – 1, 20, 00,000) |
||
|
$ 1, 80, 00,000 |
Table 4: Calculations of Overheads of New Moon
(Source: created by author)
2. Calculation for each model using overhead activity
(i) Gross Profit per unit = Gross sales – Cost of goods so
Therefore Gross profit = $ (450 – 180)
= $ 270
(ii) Gross Profit margin ($GP/$Sales) = Gross Profit/total Revenue
= $ 2700000/ $ 4500000
= 0.6
(iii) Total Gross Profit per Model
Standard model = (100,000*300) – (120*100,000)
= $ (3, 00, 00,000 – 1, 20, 00,000)
= $ 1, 80, 00,000
Eco-Green Model = (10,000*450) – (180*10,000)
= $ 45, 00,000 – $ 18, 00,000
= $ 27, 00, 000
(iv) Total Firm’s Gross Profit = Total Revenue – Total cost of goods sold
= $ 4500000 – $ 1800
= $ 4498200
|
Gross Profit per unit = Gross sales – Cost of goods sold |
||
|
Gross sales |
$450 |
|
|
Cost of goods sold |
($180) |
|
|
Gross profit Per Unit |
$270 |
|
|
Gross Profit margin ($GP/$Sales) = Gross Profit/total Revenue |
||
|
Gross profit |
$2,700,000 |
|
|
Total Revenue |
$4,500,000 |
|
|
Gross Profit margin |
$ 2700000/ $ 4500000 |
|
|
0.6 |
||
|
Total Gross Profit per Model |
||
|
Standard model |
(100,000*300) – (120*100,000) |
|
|
$ (3, 00, 00,000 – 1, 20, 00,000) |
||
|
$ 1, 80, 00,000 |
||
|
Total Firm’s Gross Profit = Total Revenue – Total cost of goods sold |
||
|
Total Revenue |
||
|
Total cost of goods sold |
||
|
Total Firm’s Gross Profit |
3. Report to the managing director of New Moon
As per the assessment, it is observed that the working of the company is going well regarding the operation to spread greenery with the advanced instruments sold in the market. A little emphasize is required in the case of selecting the right model as per the condition of the market.
References List
Books
Manchester, J. (2012). The 2012 long-term budget outlook. [Washington, D.C.]: Congressional Budget Office
McLoughlin, D. and Aaker, D. (2010). Strategic market management. Hoboken, N.J.: Wiley
Journals
Hawkins, M. (2014). Market identification to generation: a practice theory market orientation. Journal of Strategic Marketing, 23(2), pp.112-121
Stefano, N. and Freitas, M. (2014). Framework: Activity-based costing in services. REA, 7(1)
Wei, X. (2014). Countermeasure and Research of Activity-Based Costing Applied in the Enterprise of our Country. AMM, 687-691, pp.5085-5088
Xiao, L., Liu, Z. and Li, Z. (2014). The Application of Activity-Based Costing in E-Commerce Enterprises. AMR, 926-930, pp.3992-3995
Websites
Ritsumei.ac.jp, (2015). [online] Available at: https://www.ritsumei.ac.jp/~asada/file/ea4.pdf [Accessed 15 May 2015]
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