MAA103 Lecture Notes - Lecture 4: Sales Operations, Budget, Cupcake
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Weighted average = (10 x 0. 5) + (15 x 0. 2) + (20 x 0. 3) = 14. Usually looks beyond the financial year to the longer term. It looks beyond the boundary of the organization from raw material supplier to consumer and makes comparisons with competitors to continually seek competitive advantage. Steps: determine the target price that consumers will be prepared to pay for the product or service, deduct a target profit margin to determine the target cost, which becomes the cost to which the product/service should be engineered. Gourmet cupcake example: target price: based on a market survey we(cid:859)ve determined that customers are willing to purchase gourmet cupcakes for each, target cost: we would like to make a. 80% profit margin given so that means the target cost should be : estimating the actual cost of the, estimating the actual cost of the product/service based on the current design.
