Accounting for Decision Making Essay Example | Topics and Well Written Essays - 1250 words - 1

Accounting for Decision Making - Essay Example Break-even level of sales = Break-even units*Selling Price (Keiso, 1999) = 148148.15*170 = $25,185,185 Strategy #2 Fixed Cost = $25,000,000 Selling Price = $200 Variable Cost = $35 Break-even level of output = = = 151,515 units Break-even level of sales = Break-even units*Selling Price = 151515.15*200 = $30,303,030 Desired Target of Profitability The company's desired profitability target is $4 million. According to the break-even level of sales, the company must exceed the above revenue levels according to both strategies in order to be able to make profits. If the output levels, as given in the table, are taken into consideration for calculation of optimal revenue which exceeds breakeven and offers the firm with its target profitability level, the following table would provide the relevant answers to base our analysis with. Strategy 1 Â   Selling Price = $170 Estimated demand (units) Estimated Revenue ($) Profit ($) 150,000 $25,500,000 $314,815 180,000 $30,600,000 $5,414,815 200,0 00 $34,000,000 $8,814,815 Hence, if the company undertakes strategy 1, as can be seen in the table above, output levels of above 180,000 units would allow the firm to fulfill and exceed its target profitability level. This range of output also fulfills the break-even level of output therefore the firm is satisfying its desired profitability level. (Keiso, 1999) ... This level of output also has the highest probability of consumer demand levels hence the firm will benefit from undertaking this level of production and fulfilling its profitability targets. (Keiso, 1999) Margin of Safety Margin of Safety: Budgeted/Actual Sales - Breakeven Sales (Keiso, 1999) Margin of Safety (%) : MOS/(Budgeted/Actual Sales) (Keiso, 1999) Strategy 1 Â   Â   Estimated demand (units) Breakeven Sales (units) Margin of Safety (units) Margin of Safety (%) 150,000 148,148.15 1,852 1.23% 180,000 148,148.15 31,852 17.70% 200,000 148,148.15 51,852 25.93% Strategy 2 Â   Â   Estimated demand (units) Breakeven Sales (units) Margin of Safety (units) Margin of Safety (%) 150,000 151515.15 -1,515 -1.01% 180,000 151515.15 28,485 15.82% 200,000 151515.15 48,485 24.24% As stated above, the margin of safety can be expressed in either units or a percentage of the total estimated sales. These figures are important for key decision making for managers because it shows the extent by which the projected sales exceed the break-even sales. The margin of safety is an important measure of risk as it shows the amount of sales which a firm can afford to vary without incurring a loss. The higher the number, the more beneficial it is for the firm since the company would be able to withstand fluctuations in sales. A drop in the levels of sales, lower than the margin of safety would alarm the management since it would cause losses for that particular period for the firm. (Keiso, 1999) Decision The decision of whether the company should go ahead with the new product should include many other ratio and cash flow analysis and evaluations so that the management, even though they cannot avoid any risks, are able to come up with more suitable decisions. However, based

Animals and the Myriad Ways They Can Kill or Heal Us Essay - 3

Animals and the Myriad Ways They Can Kill or Heal Us - Essay Example This is in as much as the sting from the bee itself is fatal if the subject in discussion has encountered a fierce be attack from many bees whose result is incapacitation if not death. On the bright side, controlled bee stings are probably one of the first natural cures for arthritis (Krylov et al., 2007, p. 23). In the ancient civilization of countries like Egypt, India, Greece, Babylon and china bee venom was used for apitherapy. The bee venom in itself is composed of very complicated mixtures and combinations of peptides, very low molecular components and proteins (Bogdanov, 2012). In this mixture the main compositions are proteins and peptides. Its fresh counterpart mainly differs from it in regard to the volatile components but the biological activity is similar. Polypeptides: the constituents of polypeptides are the very small organelles that are composed of more than one amino acid with the main component of it being the melittin. This main component contains 2840 daltons and as a result it assumes a tetrameric form (Giri, et al., 2010, p. 95). The melittin and the protein electrophoretic patterns are typically of the honey bee species. Proteins: this component in itself is one that is catalysts specific in its reaction and since bee venom has around 5 enzymes, there is existence of very small quantities of very minimum or low molecular compounds which in themselves are not similar in any way (Bogdanov, 2012, p. 6). These may include amino acids, sugars, minerals and catecholamines. In the case of sugars, we see that they have been identified in bee venom preparations which is collected with a collector while preventing the likelihood of a contamination by pollen and nectar thus in most cases if not all, it usually does not contain carbohy drates. Composition of the dry matter of bee venom: The protein group has components that include Phospholipase A2, phospholipase B and hydraluronidase. Its counterpart i.e. peptides has