13 Additional Examples
Business Applications
Setting a Sales Price
One method for setting the per unit sales price is to determine the cost of production per unit, and then multiply by the desired rate of return. For this method to be accurate, you must identify all costs associated with the product.
The following equation calculates unit price based on total cost and rate of return: PRICE = TOTAL COST ÷ NUMBER OF UNITS × (1 + (%RTN ÷ 100))
Example
To produce 2,000 units, your cost is 40,000. You want a 20% rate of return. What price should you charge per unit?
Table
Keys | Display | Description |
|
|
|
Y:::::a | 40,000.00 | Enters cost. |
|
|
|
G:::P | 20.00 | Calculates unit cost. |
|
\qJ1\q
G:aJ::4
24.00Calculates the unit sales price.
Forecasting Based on History
One method of forecasting sales, manufacturing rates, or expenses is reviewing historical trends. Once you have historical data, the data are fit to a curve that has time on the
Example
Given the following sales data, what are the sales estimates for years six and seven?
Table
Year | Sales |
|
|
1 | 10,000 |
|
|
2 | 11,210 |
|
|
3 | 13,060 |
|
|
4 | 16,075 |
|
|
5 | 20,590 |
|
|
Additional Examples 137