BUS 311 Lecture Notes - Lecture 14: Variable Cost
Document Summary
5000 units expected sales 1000 short of b. e. It will be important to evaluate all possibilities for lily to consider: examine possible changes to lily"s model. Consider the price one possible option would be to reduce her prices. The impact of this could be a reduced level of income, and would make it more difficult to b. e. however, it may stimulate scales by encouraging more customers. It also possible to use promotions to advertise price reductions. Increase her price, this may lead to less people buying as they begin to feel the product is too expensive. Consider the quality over price of manufacturing : changes to variable costs . The variable cost can be reduced by changing supplier of the resources that are used to manufacture the products. For example, cheaper rent will lead to having a lower quality facility and paying less insurance will lead to a poorer coverage on equipment.
