For this particular study, I looked at a bakery. It was located on a college campus and it was a non-profit organization, meaning that they don’t make any money, so their income should be zero. As it is very difficult to meet exactly zero, breakeven is usually around zero, give or take a few dollars. There were students that oversaw the selling and management aspects of the organization, but civil service employees baked the goods this bakery sold. When the supervisor hires a new financial supervisor, the original prices of the products needed to be updated, in order to be the best for their customers. He said that for the single serve products there would be a maximum price of $1.50, to not raise any of the prices more than twenty-five percent, …show more content…
Smith then decides that he wants to see how the table would change if he decided to use a different bakery make the baked good for the store instead of civil service. With this change he expects the average demand by forty percent, and the bakery will charge two hundred percent of the current material costs. So, for this new table, to find the cost basis, you would take the direct material costs for the baked goods and multiply it by two hundred percent, and the drinks would stay the same. To find the markup percentage, you would do the same as you did with the original table by finding the total revenue and variable costs, including the change in demand that would occur do to getting the goods from a different bakery. To find the unit cost, you would take the new cost basis and multiply it by the new markup percentage for each item. To find the fourth column, you would take the original price and multiply it by one hundred and twenty five percent, just like in the original table. The fifth and sixth columns would also be the same as in the original table. To find the seventh column, you would use the same process as you would in the original table. To find the final prices that you could charge, I also used the same method as the original tables, making sure to charge above the cost basis price, but for the most part below the previous price. I looked at the goods that had high demand and tried to keep those prices fairly low because they sold a lot, and if they were …show more content…
This results in a higher total cost, but because they are outsourcing, their average weekly demand goes up. So the business is able to charge lower prices in order to break even. I think that because the business is a non-profit organization, it doesn’t really matter whether they outsource or not. If the business chooses to either have civil service or the other bakery produce their baked good, it doesn’t matter because they will be able to have a net income around zero either way. I think that outsourcing would be more beneficial to the customers because with outsourcing, the prices will be much cheaper than if the civil services were the ones producing the baked goods. I think outsourcing would be the better choice for this non-profit business because even though, their net income is around zero either way, they are able to serve more customers by
Worth, M. (2014). Nonprofit management: Principles and Practice. 3rd Ed. Thousand Oaks, CA: SAGE Publications, Inc.
Table C projects the break even analysis in both units and dollars as a basis for further projections. As seen in Table C substantially larger sales are required to break even.
Due to NPO MCCC often have controversial objectives related to the offering of services or intangible products, non-profit organizations MCCC may have non-financial indicators that measure the quantity and quality of services, non-profit organizations have difficulties in developing quantitative techniques helpful for evaluating the performance of the organization. BSC potentially balance financial and non-financial activities, for example, MCCC are willing to establish positive word of
Worth, M. (2014). Nonprofit management: Principles and Practice. 3rd Ed. Thousand Oaks, CA: SAGE Publications, Inc.
“Non-profits” business is capable of generating profit which means that business which are organised for non-profit make profit, they are not designed to make money for proprietors or shareholders. But, non-profits are organised to serve the government as well as the society.
Subsidy will complicate their execution of services. It’s simple, without funding, programs are not able to exist and hiring employees is out of the question. Although they have overcame many hurtles to become what they are today, they still have much to work on. Finding hardworking and dedicated people is not much of a concern in this field because if people didn’t have a heart to wanting to improve the betterment of all people through service, they would not be working countless hours with a less than gracious pay. Volunteers are another concern to the effectiveness and efficiency of the nonprofit. Volunteers act as the glue to the program. They work solely with the mindset of helping others at their own expense. Would a volunteer necessarily feel that way about it, probably not, but regardless of why, the end goal is to assist those in need in order to get he or she improved
2. In non-profit organizations they tend to find the “best solution” versus the “best cost solution” in the for profit sector.
The sales director proposed that if the firm were to reduce the price of Item 345 to FF15.00/m, they would be able to increase sales to 175,000 units (or 25% of industry volume). But if they were to keep the price at the current value of FF20.00/m, they would be able to sell not less than 75,000 units (or 11% of industry volume).
$384 per unit or "mark up" of 47% vs $764. per unit or "mark up" of 94% (not really a mark up, fixed costs not included).
Signode Industries Inc. - Providing Packaging Solutions Executive Summary SIGNODE INDUSTRY: DILEMMA AT HAND: Mr. Gary Reed, President of Signode Industries packaging division, is in a dilemma as what he should be his course of action to meet the 6.8% increase in price of cold rolled steel- the raw material used in manufacture of Signode’s primary product, steel strapping. There are few options given in the case: Increase Signode’s strapping prices to offset the increased price of cold – rolled steel. Maintain Signode’s current book prices as increasing prices would affect sales force morale. Introduce price-flex model as proposed by Jack Davis i.e. a kind of selective discounting or premium charging for customized services. Recommendations Reason: (All data in accordance to 1983) In accordance to Exhibit 1: Sales of Packaging Division of the company = $285,950 In accordance to Table A: Sales of Apex = 33.3% of $285,950 Sales of BBM = 26.8% of $285,950 Sales of HDM = 33.4% of $285,950 Sales of Customized Products = 6.5% of $285,950 In accordance to Exhibit 4: Similarly, For Apex: As it has a capacity utilization of 71% now, Suppose a sale is $100. Then contribution is $39.15 Therefore variable cost is $60.85. Now if we increase the capacity utilization to 100%, Sales becomes $ 141 since production increases by [(100-71)/71] * 100 = 41% Variable Cost = 141% of 60.85 = $85.8 Fixed Cost = 69.38% * 12.3 = $8.53 Total Cost = 85.8+8.53 = $94.33 EBIT = Sales – Variable cost – Fixed Cost = $46.67 % of EBIT = [(46.67/141) * 100] = 33.09% Suppose the company sales 100x units, the total cost was 69.38. Thus per unit cost was .6938. Now the company sells 141x units, the total cost...
The 3 percent decline in sales causing a 21 percent decline in profits can be attributed to the identification of the accounting concept of operating leverage. Operating leverage is what business managers apply to boost small changes in revenue into sizable changes in profitability. Fixed cost is the force managers use to attain disproportionate changes between revenue and profitability. Therefore, when all costs are fixed every sales dollar contributes one dollar toward the potential profitability of a project. Once sales dollars cover fixed costs, each additional sales dollar represents pure profit. A small change in sales volume can significantly affect profitability (Edmonds, Tsay, & Olds, 2011). So, therefore, if sales volume increases,
A fraction-of-a-cent cost change can represent a large dollar change in overall profitability, when selling millions of units of product a month. Managers must carefully watch per unit costs on a daily basis through the production process, while at the same time dealing with materials and output in huge quantities” (From Academic
...urcing services, the company operation will be became a mess. This is because one organization can’t run a lot of task or project at one time. Therefore an organization need outsourcing in the way to help their organization run smoothly.
During the last few years, Harry Davis Industries has been too constrained by the high cost of capital to make many capital investments. Recently, though, capital costs have been declining, and the company has decided to look seriously at a major expansion program that had been proposed by the marketing department. Assume that you are an assistant to Leigh Jones, the financial vice president. Your first task is to estimate Harry Davis’s cost of capital. Jones has provided you with the following data, which she believes may be relevant to your task.
In nonprofit organizations, the monetary support provided is not always directly related to the service provided, as patrons are not directly charged for services. So the success is measured by the quality of economically costed services.