Cost Scenario
Cost Scenario
University of Phoenix
ECO 561PR
October 22, 2012
Professor Adelaida Torres Dilan
Cost Scenario
The San Juan Cell Phones Scenario Summary talk about this company that manufacture cell phones where Maria Perez, a business development specialist, secured an order of 100,000 units with this major chain, which is an opportunity to the company to increase their production and their profit. Cell phones are very important to the community these days for business, to keep in touch with the family or just to feel independent and secure. The first cell phone was created in 1973 by Martin Cooper of Motorola and others assistants and in 1984 they were available to the public. Today cell phones are more than just a mode of communication it is also a data search, an agenda, entertainment and also a Global Positioning System (GPS).
The San Juan Cell Phones Company has two products, the Alpha model and the Beta Model, both with different prices, variable cost, fixed overhead and a profit (Table 1-1).
Table 1-1 Unit Profitable Report
If we compare the cost of both products, the Beta model is more expensive but earns more profit for the company in compare with the Alpha model. On the other hand the Beta model costs more to produce, because is $5 over the Alpha model when you add the variable cost and fixed overhead. If we compare these two products in a production of 100,000 units the profit that we are going to have is presented in the Table 1-2. In this table we can see the differences in variable cost, fixed
Table 1-2 Unit Comparison Profitable Report
overhead and profit between each product and for our surprise the differences in profit is the differences in variable cost plus fixed overhead. However the unit profits were good and the cost control, but this major chain, Big Box, is not going to pay San Juan Cell Phone unit price and for this reason they are looking for others alternatives. One of
University of Phoenix
ECO 561PR
October 22, 2012
Professor Adelaida Torres Dilan
Cost Scenario
The San Juan Cell Phones Scenario Summary talk about this company that manufacture cell phones where Maria Perez, a business development specialist, secured an order of 100,000 units with this major chain, which is an opportunity to the company to increase their production and their profit. Cell phones are very important to the community these days for business, to keep in touch with the family or just to feel independent and secure. The first cell phone was created in 1973 by Martin Cooper of Motorola and others assistants and in 1984 they were available to the public. Today cell phones are more than just a mode of communication it is also a data search, an agenda, entertainment and also a Global Positioning System (GPS).
The San Juan Cell Phones Company has two products, the Alpha model and the Beta Model, both with different prices, variable cost, fixed overhead and a profit (Table 1-1).
Table 1-1 Unit Profitable Report
If we compare the cost of both products, the Beta model is more expensive but earns more profit for the company in compare with the Alpha model. On the other hand the Beta model costs more to produce, because is $5 over the Alpha model when you add the variable cost and fixed overhead. If we compare these two products in a production of 100,000 units the profit that we are going to have is presented in the Table 1-2. In this table we can see the differences in variable cost, fixed
Table 1-2 Unit Comparison Profitable Report
overhead and profit between each product and for our surprise the differences in profit is the differences in variable cost plus fixed overhead. However the unit profits were good and the cost control, but this major chain, Big Box, is not going to pay San Juan Cell Phone unit price and for this reason they are looking for others alternatives. One of
References: Business Dictionary.com. (2012). Retrieved from http://www.businessdictionary.com/definition/equilibrium-price.html Business Strategy Game (2012) Recommended Decision-Making, Retrieved from: University of Phoenix Material (2011) Carlos Cruz’s Price Elasticity Scenario Retrieved from:https://portal.phoenix.edu/classroom/coursematerials/eco_561pr/20121010/OSIRIS:40990706 Key Facts