Mba 570 Marketing Plan

Financials   Dell Inc.

University of Phoenix

Marketing Plan   Financials   Dell Inc.

Break Even Analysis
      Kerin, Hartley, Kerkowitz, and Rudelious stated, “Break-even analysis is a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output” (2005, p.351). The following exercise is an exemplification of the break even-point calculation in units for the proposed hands free-voice activated computer. Based on a selling price of $700 per computer (estimated introduction price for the new computer), estimation of a fixed cost at $25,000 (estimated research and development, fixed building cost and operational cost allocated to this product), and estimation of unit variable cost of $210 (labor cost and other variable cost estimated at 30% of the selling price) the next step would be to calculate the number of units needed to break even.
      According to Kerin, Hartley, Kerkowitz, and Rudelious (2005), the break even-point quantity calculation is a follows: Break Even Point (BEP) = Fixed Cost / Unit price   Unit variable cost. By applying the stated formula to the computer price structure described above one can conclude Dell would need to sell 51 computers to break even. In addition, by selling more than 51 computers Dell would be profitable. For example, if Dell would double the quantity sold to 102 computers it would generate revenues of $71,400 and profits of $24,980. As noted at the beginning of this section, the break-even analysis technique is useful to determine profitability at various levels of output.
Budget for Dell’s Hands Free-Voice Activated Computer
      Michael Dell, CEO has approved a $5,000,000 budget for the launch of our new product. The conditions of this budget is for the 12 month period ending December 31, 2009. The sample test market is for sales in 10% of the state of Texas which is 10% of the total U.S. Market. The vice-presidents of marketing and...