Newcastle Division Case

Case 3 Newcastle ingredient Topic: CVP, Probabilities and Tar purview pay A meeting of superior managers at the Newcastle Division has been c altogethered to discuss the pricing scheme for a recent growth. Part of the discussion will focus on the puzzle of forecasting sales volume. In the last form a significant number of new results arrive at failed to carry off their forecast sales volumes. The financial accountant has already verbalise that the profit for the year-end will be lower than opine and the main reason for this is the disappointing sales of new products. A new technique for estimating the luck of achieving target sales and gain will be discussed. This requires managers to estimate demand for the new product and assign probabilities. The management accountant is in favour of this machinate as she wants to avoid having a single estimate for sales. expatiate of pricing stategies The first system is to set a exchange worth of £ 170 with annual fixed be at £22,000,000. A number of managers are in favour of this dodge as they believe it is important to reduce be. The second strategy is too have a much higher using up on advertising and promotions and set a selling outlay of £190. With the higher selling price the annual fixed costs would increase to £27,000,000. The marketing department are very candid that greater expenditure on advertising and promotions is essential for this product. The following(a) probability distribution has been agreed with the managers after consultation and is the analogous for some(prenominal) selling prices. A wide range of managers from all departments have agreed to this estimate.

|Estimated demand (units) |Estimated probability (units) | |150,000 |0.1 | |160,000 |0.4 | |180,000 |0.3...If you want to get a full essay, order it on our website: BestEssayCheap.com

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