Case: Inputs Diagnosis SLP: Time Warp 2

Input Diagnosis, SLP: Time Warp 2

Introduction

The main objective of the company is to earn profit and it is always a matter of crucial concern for the management. The sales volumes never remain stable rather they fluctuates which directly impact on the income. Profit is the outcome of the interaction or relationship between different factors such as volume, cost and selling price. It depends on the manager effectiveness on how his potential regarding the right forecast for future profits. In order to have a strong and victorious business, company management need to have an apparent understanding on the financials and the impact of financial on the business decisions.

This SLP module 3 will focus on the reviewing and analyzing the results that got in SLP2 where a proper development of a revised strategy and making new strategy through using CVP-analysis and relevant theories in order to have a sound business principles and values.

Discussion

Time Warp 2 and CVP Analysis:

We are once again back in order to make an effective decision regarding the pricing, R&D Allocation % and discontinuations of any product. Different approach would be used as New Year has been past and new strategy needed for the enhancement of the company profit. This time the CVP analysis would be used. CVP analysis has been considered as a power toll when management decides to make future decision and decide to develop a new strategy for their products (Hambrick, D.C., Frederickson, J. 2001).

For companies the analysis of cost, volume, profit, applies not only to the projections of earnings, but due to its useful in virtually all areas of decision making. It is useful in making decisions about product pricing, selection of distribution channels, the alternative decision to make or buy, in determining alternative methods of production, capital investment. The analysis of cost, volume, profit represents the basis for the budget variable and therefore is a useful tool in planning and control (Heisinger K., 2010).

Furthermore, it is the systematic examination of the relationship between sales prices, sales, production, costs, expenses, and utilities. This analysis provides very useful information for decision making to the administration of a company. For example, the analysis can be used in setting selling prices, in selection of product mix to sell, the decision to choose marketing strategies, and in the analysis of the effects on earnings of changes in costs. In the current environment of business, a business administration must act and make decisions in a fast and accurate. As a result, the importance of cost-volume-profit continues to increase according to time. Clipboard Tablet Company will use CVP tool which will assist them in making decision about the three products at the beginning of the year 2012 till 2015.

There are different ways of using CVP analysis. To calculate the breakeven point, price to earn profits or product unit needed in order to be sold to earn the required profit. As the main task is to perform better than Schmoe, the focus ...