Performance Analysis of Clipboard Tablet CT Essay

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Module SLPIntroductionThis paper analyses Clipboard Tablet (CT) performance, and provides a revised strategy for the four-year plan that was initially developed. Notably, the analysis will be based on Cost-Volume-Profit (CVP). The revised strategy takes into account prices, research and development allocation percentage, together with any rational product discontinuations for the X5, X6, and X& tablets for each of the years ranging from 2012 to 2015. The analysis considers the break-even point of the each of the products in the financial years both in terms of revenue generated and the sales units. In addition, the analysis outlines the contribution margin for the tablets in the 2012, 2013, 2014, and 2015 financial years and the margin of safety.Preceding Analysis SLP 2The set product prices of the three individual tablets together with the research and development percentage allocation are illustrated as below:TabletSet Product PricesR&D AllocationX5$ 285.0033%X6$ 430.0034%X7$ 190.0033%Based on the market rates, X5 has a market price of $285, X6 has a market price of $430 and finally X7 has a market price of $190.Revenue20112012201320142015X5276,159,075469,563,809611,502,211528,155,442274,676,048X6243,073,200554,269,513918,020,2061,016,546,240480,801,048X7031,461,25345,068,36564,305,05791,167,056Total RevenueX5X6X720112.76E+082.42E+08020124.7E+085.54E+083146125320136.12E+089.18E+084506836520145.28E+081.02E+096430505720152.75E+084.81E+0891167056Total Profit20112012201320142015X543,991,298139,504,962206,738,942167,258,89447,189,707X637,579,840154,134,825285,254,260320,769,459127,652,006X70-23,065,952-13,397,740270,43519,356,593Total profitX5X6X720114399129837579840020121.4E+081.54E+08-2.3E+0720132.07E+082.85E+08-1.3E+0720141.67E+083.21E+082704352015471897071.28E+0819356593Cost-Volume-Profit AnalysisCost-volume-profit (CVP) analysis is utilized to make a determination as to how alterations in costs and volume have an impact on the operating income of a company as well as the net income. In conducting this analysis, there are different assumptions that were undertaken including the follows:1. Variable costs per unit of the tablets are constant2. Sales price for every unit of the tablets is constant3. Total fixed costs for the tablets are constant4. All commodities that are produced are sold5. The costs are only influenced owing to the changes in activity6. Since the company retails more than one tablet, they are sold in the similar mix (Drury, 2013).CVP is a way of ascertaining the manner in which changes in both variable costs and fixed costs and sales volume have an impact because companies can have an improved understanding on the general performance. Notably, the analysis encompasses looking at the number of units that have to be sold in order to break even to reach a particular profit threshold or the margin of safety. A key component of the CVP analysis the contribution margin, which is the total revenue generated less the total variable costs. In the same manner, contribution margin per unit refers to the selling price for every unit less the variable cost for every unit. These two elements are very important tools when taking into consideration the effects of volume on the income and profit generated. In this regard, the contribution margin for every unit provides insight on the amount of revenue from the retailed units can be applicable toward fixed costs. Subsequent to retailing adequate units to cover all fixed costs, then the contribution margin for every unit from the other remaining sales are deemed profit. Second, break-even analysis makes it possible for a firm to compute the margin of safety on the basis of the generated revenues and the linked costs. Examining dissimilar price levels associated to different levels of demand, a firm employs break-even analysis is to ascertain what level of sales are necessitated to encompass the total fixed costs (Wentworth and Cafferky, 2014).The following tables illustrate the cost-volume-profit analyses of tablets X5, X6, and X7 for the 2012, 2013, 2014, and 2015 financial years. The tables outlines the contribution margin, net earnings, break even analysis, and margin of safety for the three products in each of the financial years.Cost Model (2012)X5X6X7Sales volume1,647,5921,288,999165,568Sales…

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…to have increased demand in the forthcoming financial years.

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Therefore, it is imperative to decrease the cost incurred in its production and make it outstanding in the market to increase the sales and revenues generated.Results and ConclusionCVP analysis takes into account the cost, volume and profit generated by a firm. A key aspect of analysis is the breakeven point, which is the level of activity necessitated to break even. This makes it possible to determine the level of operating activity at which the revenues generated are able to cover all of fixed and variable costs, giving rise to zero profit. The strategy to be taken is to decrease the selling price of tablet X7. Taking into consideration that in 2012, the net earnings generated are a loss of $15,145,952 and a loss of $5,477,441 in the 2013 financial year, one of the options could be a strategic move of discontinuing the production of the X7 tablet. However, this does not appear to be an ideal approach because in the subsequent financial years, the product line generated net incomes of $414,593 in 2014 and $27,276,592 in 2015. Therefore, the suggested strategy is for CT to pronounce a decrease in the price of the X7 tablet. Based on the law of demand, with all factors remaining constant, a decrease in the price of a commodity is expected to cause an increase in the demand for a commodity. Therefore, this will prompt increased sales of the tablet and therefore increase the revenue generated. Lastly, it is also recommended for CT to increase the R&D allocation percentage for X7 tablet. This is to decrease the variable costs for the product to make it more affordable in the market and increase the sales….....

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