COURSEWORK - RO65 - LO4 |
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Mark band 1
Identifies the fixed and some variable costs relating to their chosen product design and applies the information identified to complete variable cost calculations for their product design, with limited accuracy. Selects a pricing strategy for their product design with little relevance to their identified customer profile and proposes a selling price per unit that evidences limited consideration. Predicts a number of units for sale in the first month that evidences basic reasoning and calculates the predicted total costs for the first month and predicted total profit for the first month, with limited accuracy. [1 - 3] Demonstrates a basic understanding of break-even. Applies the break-even formula in order to calculate the breakeven point for their business proposal with limited accuracy. Identifies the results of the break-even analysis in the context of their business proposal. Provides a basic outline of the impact of a change in price on the break-even point for their business proposal. Demonstrates a limited understanding of the risk factors involved with producing a new product. The financial viability of their business proposal is assessed with limited accuracy and detail.
[1 - 3] |
Mark band 2
Identifies the fixed and most relevant variable costs relating to their chosen product design and applies the information identified to complete accurate variable cost calculations for their product design. Selects a pricing strategy that is mostly appropriate for their product design and identified customer profile and proposes a partly reasoned selling price per unit. Predicts a partly reasoned number of units for sale in the first month and mostly accurately calculates predicted total costs for the first month and predicted total profit for the first month. [4 - 6] Demonstrates a sound understanding of break-even. Accurately applies the break-even formula in order to calculate the break-even point for their business proposal. Describes the results of the breakeven analysis in the context of their business proposal. Describes the impact a change in price would have on the break-even point for their business proposal. Demonstrates a reasoned understanding of the risk factors involved with producing a new product. Partly evaluates the financial viability of their business proposal.
[4 - 6] |
Mark band 3
Identifies the fixed and all relevant variable costs relating to their chosen product design and applies these to accurately calculate the total variable costs per unit for their product design. Selects a pricing strategy that is wholly appropriate for their product design and identified customer profile and proposes a thoroughly reasoned and appropriate selling price per unit. Predicts a thoroughly reasoned number of units for sale in the first month and accurately calculates predicted total costs for the first month and predicted total profit for the first month. [7 - 9] Demonstrates a thorough understanding of break-even. Accurately applies the break-even formula in order to calculate the breakeven point for their business proposal. Comprehensively describes the results of the break-even analysis in the context of their business proposal. Comprehensively describes the impact a change in price would have on the break-even point for their business proposal. Demonstrates an extensive understanding of the risk factors involved with producing a new product. Fully evaluates the financial viability of their business proposal.
[7 - 9] |
LO4 Application
Task 2
Consider the impact on the break even number of units if you were to select a different selling price. Change the price you charge customers for your pizza, but using the same pricing strategy (e.g. psychological pricing) and recalculate the BEP using the following formula:
Fixed cost per unit / (Selling price per unit - variable cost per unit) = BEP in units
Write a couple of sentences to explain what the change in price has done to the BEP and what this means for the business, i.e. how many pizza's they will need to sell, profits, etc.
Consider the impact on the break even number of units if you were to select a different selling price. Change the price you charge customers for your pizza, but using the same pricing strategy (e.g. psychological pricing) and recalculate the BEP using the following formula:
Fixed cost per unit / (Selling price per unit - variable cost per unit) = BEP in units
Write a couple of sentences to explain what the change in price has done to the BEP and what this means for the business, i.e. how many pizza's they will need to sell, profits, etc.
Task 3
> State which pricing strategy you are using and why. This must link back to your customer profile
> State which price you are going to charge (you should have considered at least two). Explain why you think this is the right price to charge, linking back to customer profile, results from primary market research, and break even analysis
> Forecast how many sales you are likely to make in your first month, giving evidence for your prediction
> Calculate total costs for first month (Variable cost per unit X forecasted units sold + Fixed costs)
> Calculate total profit for first month (Price per unit X forecasted units sold - total costs for month)
> State which pricing strategy you are using and why. This must link back to your customer profile
> State which price you are going to charge (you should have considered at least two). Explain why you think this is the right price to charge, linking back to customer profile, results from primary market research, and break even analysis
> Forecast how many sales you are likely to make in your first month, giving evidence for your prediction
> Calculate total costs for first month (Variable cost per unit X forecasted units sold + Fixed costs)
> Calculate total profit for first month (Price per unit X forecasted units sold - total costs for month)
Task 4
Write a summary of your business proposal, ensure you discuss:
> The risks involved with producing your design
> How financially viable you consider the proposal to be
> If you think Perfecta Pizza should go ahead with your design proposal (i.e. make the pizza)
Please remember to justify your points with reference to your customer profile, target market, market research and =financial calculations.
Write a summary of your business proposal, ensure you discuss:
> The risks involved with producing your design
> How financially viable you consider the proposal to be
> If you think Perfecta Pizza should go ahead with your design proposal (i.e. make the pizza)
Please remember to justify your points with reference to your customer profile, target market, market research and =financial calculations.