Harvard Case Study Summary

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The financial analysis is a company’s financial statement that provides an assessment on the company’s profit and stability. The financial statement provides an accurate picture of the company finances, a detail income statement that shows how much a company earns. This is the report used by investors to determine the decrease and/or increase of a company prior to making an investment. This report will provide an analysis on the Harvard Case Study “Note on marketing Arithmetic and Related marketing Terms” by Star, Heskett, and Levitt (1974). I will use the terms in this case study as a guide to answer the following questions that’s based on this Financial Analyses. If the retail price is fixed at $1.00, and the retail and wholesale margins were increased, this will cause the manufacturer’s selling price to be reduced. However, if the product manager Mr. Alger decided to increase both the retail and/or wholesale margin, doing so will increase the company’s revenue since the calculations were based on the retail price. Seeing that the retail prices is fixed, in order for Mr. Alger to provide additional benefits to retailer or wholesaler he will have to decrease the selling price. According to Star, Heskett, and & Levitt, (1974). “The funds available to the seller of an item after subtracting the variable cost associated with it are referred to as contribution.” The unit contribution determines the price a unit should be sold for, it is the left over funds that is contributed to profit or fixed cost once the variable cost and sales price are subtracted from each other. In order to compute a break-even sale, company uses the unit contribution as a part of the …show more content…

“Break-even analysis evaluates whether the firm will be able to break every – that is, cover all its costs – with a particular price. That is important because a firm must cover all cost in the long run or there is not much point being in business.”

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