1 / 4

Target Profit Price = total costs [at Level X] + Target profit

Target Profit Price = total costs [at Level X] + Target profit number of units [at Level X]. So in the case of our business lady who said X = 100 and Target profit was $5 000. [Total costs = Fixed costs + Total Variable costs]

Download Presentation

Target Profit Price = total costs [at Level X] + Target profit

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Target Profit Price = total costs [at Level X] + Target profit number of units [at Level X] So in the case of our business lady who said X = 100 and Target profit was $5 000. [Total costs = Fixed costs + Total Variable costs] and Total Variable Cost = Variable Cost Per Unit x Number Of Units = $10 000 + [$20 x 100] I just invented the Fixed Costs and Variable Cots per unit = $12 000 $12 000 + $5 000 = $170 100 The lady must charge of price of $170 if she can only make 100 units and wants to earn $5 000 profit.

  2. ANOTHER EXAMPLE

  3. I know how much profit I want to make ( I have a holiday planned!) I know how much supplies I can get so I know how many cupboards I wish to make B A Now I want to know what price I should charge for each cupboard? C Target Profit price [C] = total costs [at Level A] + Target profit of B number of units [ie A]

  4. A = 25 cupboards B = $5000 TFC = $1000 & AVC = $100 P = ? P = ($1000 + [$100 x 25]) + $5000 25 P = $340

More Related