Newcastle Division Case

Case 3 Newcastle segmentation Topic: CVP, Probabilities and Tar slang pay A meeting of superior managers at the Newcastle Division has been c altogethered to discuss the pricing scheme for a impertinently growth. Part of the discussion will focus on the riddle of forecasting sales volume. In the last form a significant number of new growths hold back failed to carry away their forecast sales volumes. The financial accountant has already declare that the profit for the year-end will be lower than direct and the main reason for this is the disappointing sales of new products. A new technique for estimating the fortune of achieving target sales and profit will be discussed. This requires managers to estimate demand for the new product and assign probabilities. The management accountant is in favour of this boot out as she wants to avoid having a single estimate for sales. flesh out of pricing stategies The first schema is to set a sell wor th of £170 with annual fixed be at £22,000,000. A number of managers are in favour of this schema as they believe it is important to reduce cost. The second strategy is too have a much higher expend on advertising and promotions and set a selling determine of £190. With the higher selling price the annual fixed costs would increase to £27,000,000. The marketing department are very expose 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 two 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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