tailieunhanh - The Fast Forward MBA in Finance_9

Tham khảo tài liệu 'the fast forward mba in finance_9', kinh doanh - tiếp thị, quản trị kinh doanh phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | PROFIT AND CASH FLOW ANALYSIS the general level of service to its customers to boost unit margin gambling that the higher unit margin will more than offset the loss of sales volume. Of course this brings up the loss-of-market-share problem again which I won t go into here. To illustrate this scenario of lower cost and lower sales volume suppose the business could lower the product costs in its standard product line from to per unit but this cost savings results in lesser-grade materials cheaper trim and so forth. And the company could save on its shipping costs and reduce its unit-driven variable costs from to per unit but in exchange delivery time to the customers would take longer. The combined cost savings would increase unit margin by the same amount. The general manager of this profit module knows that many customers will be driven off by the changes in product quality and delivery times. She wants to know just how far sales volume would have to fall to offset the gain in unit margin. Figure shows that if sales volume fell to 75 472 units profit would be the same. In other words selling 75 472 units at a unit margin each would generate the same contribution margin as before. If sales fell by only 10 000 or 15 000 units profit would be more than before. And certainly fixed costs would not go up at the lower sales volume. If anything fixed costs probably could be reduced at the lower sales volume. Standard Product Line Before After Change Sales price Product cost Revenue-driven expenses Unit-driven expenses Unit margin - - Sales volume 100 000 75 472 - - Contribution margin 2 000 000 2 000 000 Fixed operating expenses 1 000 000 1 000 000 Profit 1 000 000 1 000 000 FIGURE Lower costs causing lower sales volume. 168 COST VOLUME TRADE-OFFS This sort of profit strategy goes against the grain of many managers. Of course the business could .

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