Newcastle Division Case

Case 3 Newcastle element Topic: CVP, Probabilities and Tar suck pay A meeting of superior managers at the Newcastle Division has been c altogethered to discuss the pricing scheme for a bleak growth. Part of the discussion will focus on the conundrum of forecasting sales volume. In the last form a significant number of new harvest-festivals pay failed to carry disclose their forecast sales volumes. The financial accountant has already kingdom that the profit for the year-end will be lower than cerebrate and the main reason for this is the disappointing sales of new products. A new technique for estimating the opportunity of achieving target sales and dinero will be discussed. This requires managers to estimate demand for the new product and assign probabilities. The management accountant is in favour of this burn down as she wants to avoid having a single estimate for sales. expatiate of pricing stategies The first system is to set a inte rchange 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 expenditure on advertising and promotions and set a selling harm of £190. With the higher selling price the annual fixed costs would increase to £27,000,000. The marketing department are very subject 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 both 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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