TenAlpina Case Study Analysis
Breakeven
Breakeven is a point where the company has to sell enough units in order to cover its variable and fixed cost. It is also referred as zero revenues but to cover the whole cost.In order to calculate the breakeven point it is assumed that all the marketing mix remains same and there is no increase and decrease in marketing mix such as per unit price, change in marketing cost and depreciationexpense etc. The number of units that the company is manufacturing and selling are 4200, 400 and 2300 respectively. by multiplying the number of units to per unit cost the selling cost of pitons, hammer and rock nuts are 4400, 24400, and 563650 respectively. Weighted average contribution margin of TenAlpina is 10.25. The break even number of units of TenAlpina are 2026 which indicates that the company must have to sell the 2026 in order to reach the breakeven point. The break even cost of the company is 54047which includes the variable and fixedcost. However, the breakeven units for Piton, Hammer and rock nuts are 715, 396 and 914 respectively. Calculations are shown in appendix-2.
Current Safety Margin
Margin of safety indicates the amount by which a company's sales could decrease before the company will have no profit. The current safety margin of the TenAlpina is 57%. It shows that the company is earning 57 percent over its contribution margin. (Hermanson)..............................
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