Pricing Analysis of the New Business Model

The calculations for the pricing of the new business model are given in the section of exhibits. The pricing of the new product measured by cost analysis of both the companies Kendrick and Corey as it is important to understand the outcome that come from tests conducted for both the businesses. By taking the data from the case the price of the Curled Metal cushion pad for both firms' job is calculated.

The Kendrick cost per set is $150 while the total pad used by the Kendrick for performing the job is 480.The total pad used is calculated by multiplying the number of the pads per set and the number of the sets required in order to implement the pile driving process. Furthermore, from the pricing analysis for the Kendrick it is concluded that the performance would be enhanced the efficiency of the process if the Curled Metal cushion pad are used in place of the conventional pads. The cost of per pad for the Kendrick job is 6.25 that shows each pad from the total of 480 cost 6.25 if the Curled Metal cushion pad used for the pile driving process. Total Time required to change per set is 400 min.

The total cost of the sets that Kendrick requires is $3000 that is calculated by multiplying the number of pads per set 24 with the Kendrick cost per set which is $150. The price of the Curled Metal cushion pad is $ 500 if $3000 is spent on pads that is calculated by dividing the total cost of the sets with the number of cushion pads per set required which is 6.

The Corey paid $120 for each set of 12 pads used, whereas the total pad used by the Corey for performing the job is 600. The total pad used is calculated by multiplying the number of the pads per set 12 and the number of the sets required 50.In addition to this, The cost of per pad of the Corey job is 10 that shows each pad from the total of 600 cost 10 if the Curled Metal cushion pad used for the pile driving process. The Total Time required to change per set is 1000 min. The total cost of the sets that Corey requires is $6000 that is calculated by multiplying the number of pads per set 12 with the Kendrick cost per set which is $120. The price of the Curled Metal cushion pad is $ 1,200 if $6000 is spent on pads that is calculated by dividing the total cost of the sets with the number of cushion pads per set required.

Sales Growth of the New Business Model

The growth of the sales of the new business model is calculated by analyzing the sales expected from the job performed by both the companies Kendrick and Corey. The total revenue that is expected from the Kendrick job is $ 1,500,000 showed the sales growth for a year if Curled Metal cushion pads used instead of the conventional pads. The total sales for the year is calculated by dividing the Cost of total sets $3,000with the price of per cushion pad that is $ 500.

Whereas, the total revenue that is analyzed from the job of the Corey is $ 7,200,000 for a year by using the Curled Metal cushion pads. The total sales for the year is calculated by dividing the Cost of total sets $6,000with the price of per cushion pad that is $ 1,200.

Profitability Analysis of Two sets of Projected Manufacturing Costs

The profitability analysis of the profit and loss accounts made on the basis of the two options for manufacturing the Curled Metal cushion pads that are manufactured with the existing equipment and with the purchase of permanent tooling.

The price per cushion pad is almost $ 500 and the estimate volume cushion pads per month was 250. The total amount of 3000 cushion pads will be manufactured per year and this would produce the total revenue of $ 1,500,000 per year by marketing the Curled Metal cushion pads.

The total cost of the gold sold of the existing equipment that includes the material and labor cost is $ 399,960 at the total variable cost of $133.32.Moreover, the gross profit calculated for the existing equipment is $1,100,040 while the fixed factory overhead is also calculated by multiplying the total amount of 3000 cushion pads with the fixed factory overhead rate of 311.04.The profit margin for the existing equipment is $ 600,000 has been calculated by multiply the total amount of 3000 cushion pads with the 40% of selling price of $500.This set of manufacturing project with the existing equipment result in the net loss of ($433,080).................................

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