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# module bus 599 slp #3 (Essay Sample)

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MODULE BUS 599 SLP #3 Name: Course: Professor Name: (February 22, 2012) Module Bus 599 slp #3 Introduction The company is rushing against a time warp in achieving it major goal of profitability; this requires a Cost Volume and Profit (CVP) analysis to ensure every aspect of the business is covered (Kinney & Raiborn 2008; Harrington, 1991). The company has managed to acquire cumulative profits for the three models i.e. X5, X6, and X7 for the previous fiscal year 2011. This will enhance the performance and increase productivity in the company. It requires estimates of revenues, costs and profits so that the operation is monitored to avoid losses. It is based on the total revenue and total costs (Balakrishnan, et al. 2008; Albrecht, et al. 2010). Analysis For the year 2011, the total costs had increased highly from the previous year i.e. from 400,395, 803 to 702,004,245. This is a great increase in the costs which must be reduced so as to increase profitability. Though profitability increased in the same year it would need reduced costs where it reduces by half so that profits may double. The increased total costs could be attributed to the increase in variable costs which increased from 270,395,803 to 536,004,245. The specific brands also increased in profits meaning that the revenue was increasing. For instance, the profitability of X5 had increased from 12 to 26 percent, while X6 had risen from 16 to 29 percent. The X7 products performed worse since it was negative 73 percent this would be attributed to the fact that it was introduced in the market. In 2012, the decisions that were made included strategies to reduce costs for the various models. The reduction of the R & D figures of the X5 and X6 models was a strategy to reduce the total costs to be used in the models. However the increase of the R&D costs for the X7 model resulted to a higher total cost which was not intended. The total costs increased from 702,004,245 to 936,135,255; while the profitability increased from 24 to 29 percent. The total sales increased for the products where the X5 were 1535,407, 1169,363, and 155,597. The increase of profitability could be attributed to the increased sales from the models which should be encouraged; however for increased profitability there is need for reduced variable costs. This is not the same as in fixed costs which might be less in costs; the fixed costs are based on assets which are more important than variable costs (Howard & Peter 2003; Menne-Haritz, 2004). Fixed assets are also easier to plan than variable costs and hence reducing the variable costs will be a better idea. To increase the re...
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