Dmt Analysis

Topics: Variable cost, Marketing, First class travel Pages: 3 (790 words) Published: April 15, 2013
Chapter One Analysis
Based on the Excel Problem of chapter one, if the total capacity for this business is 725 will you stay in it? If you want to stay in it what price you need to obtain a break even point of 725?

On Problem #4 the Break-Even Analysis was as follows:

Price per Unit $1.50

V. Cost per Unit $0.50

Total Fixed Cost $750.00

Break Even in Units= Fixed Cost Unit Contribution margin=
Unit Contribution Margin (Price per Unit – V. Cost per Unit)

= 750/ (1.50 - .50) = 750 units

Break Even Point = Price per Unit x Break Even in Units

750 units x $1.50 = $1125
To be fair and honest as a student I would not stay in a business that I break even with no profit and doing a lot of effort just for the pleasure of working or maintaining the business. As a Business owner I would stay in it, hoping to have a marketing technique that would increase the chances of a profitable forecast. If we use the new information the Break-Even Analysis would be as follows: Price per Unit $1

725 units

Break Even Point = Price per Unit x Break Even in Units

725 units x $1= $725

Chapter Two Analysis
Based on the excel problem of chapter 2, between cost and sales which column shows more stability or control?

A change in the cost can drastically affect the sales. A change in sales volume can also affect the net profit. Another variable that is important is the price of the product which interacts with volume and costs. With the Breakeven analysis it showed us the relationship between the prices of the product sold, the volume of the product, and costs or expenses. In this case the sales were not so much affected by the cost. In retrospective the sales could be affected by the quantity of the product sold.

If you compare the trend of cost/unit versus the profit/unit using a scatter chart, what can you infer from their behavior?

I would say that the product profit shows a substantial increment from the months of August to December. In...
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