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    Break Even Analysis Toothbrush

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    AvinashBaxla
    After six months, the cumulative revenue from toothbrush sales passes the cumulative costs, meaning the break-even point is reached at around $2.77 million in investment. The toothbrush project requires significant initial investment in research and development, advertising, production, and operating costs in the first year. However, costs for advertising and production are expected to decline in the second year as the design is finished and customers become more familiar with the product. Within two years, the project is estimated to generate $143 million in total revenue and $10.7 million in net profits.

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    Break Even Analysis Toothbrush

    Uploaded by

    AvinashBaxla
    297 views3 pages
    After six months, the cumulative revenue from toothbrush sales passes the cumulative costs, meaning the break-even point is reached at around $2.77 million in investment. The toothbrush project requires significant initial investment in research and development, advertising, production, and operating costs in the first year. However, costs for advertising and production are expected to decline in the second year as the design is finished and customers become more familiar with the product. Within two years, the project is estimated to generate $143 million in total revenue and $10.7 million in net profits.

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    cost involved in launching new product (toothbrush)

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    After six months, the cumulative revenue from toothbrush sales passes the cumulative costs, meaning the break-even point is reached at around $2.77 million in investment. The toothbrush project requires significant initial investment in research and development, advertising, production, and operating costs in the first year. However, costs for advertising and production are expected to decline in the second year as the design is finished and customers become more familiar with the product. Within two years, the project is estimated to generate $143 million in total revenue and $10.7 million in net profits.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    297 views3 pages

    Break Even Analysis Toothbrush

    Uploaded by

    AvinashBaxla
    After six months, the cumulative revenue from toothbrush sales passes the cumulative costs, meaning the break-even point is reached at around $2.77 million in investment. The toothbrush project requires significant initial investment in research and development, advertising, production, and operating costs in the first year. However, costs for advertising and production are expected to decline in the second year as the design is finished and customers become more familiar with the product. Within two years, the project is estimated to generate $143 million in total revenue and $10.7 million in net profits.

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    Break Even analysis

    As seen from the graphic, after six months of sale, in the first quarter of second year, our
    cumulative revenue passes the cumulative cost. Thus, the maximum amount of investment
    to pass the break-even point is about $2.77 million.

    Cost and Income analysis


    Toothbrush project is a global project and requires huge amount of money for the first year.
    However, after one year, it will get a positive cash flow and after two years, it will generate
    profit. The project relays on capital that will be invested by a venture capitalist and the
    absolute size of the business depends on the money to be invested.
    In this section, we breakdown the significant costs and make an analysis of investment
    versus revenue.
    The most important cost items are;
    Research & development cost (including design)
    Advertisement cost
    Production cost
    Operating cost
    Among those, research & development cost is fixed and cannot be reduced too much.
    However, advertisement and production costs are flexible and can be modified according to
    the invested capital. Before we continue with our detailed cost analysis, we want to present
    the expected trends in different cost items first.

    As seen from the graphics, research&development and advertisement, the costs are
    expected to be declined in second year as our product design is finished and the customers
    become aware of our product.

    Income from Sales


    In the marketing section of this business plan, we showed that the total turnover of electrical
    toothbrush industry in Europe and USA was $578 million for 2009.
    We expect to increase our share in this total turnover gradually within two years. The figure
    previously given in Realization Schedule section, presented our estimation quarter by
    quarter for the following two years.
    If we achieve the expected growth in our estimations then we can obtain a turnover that is
    shown in the following diagram.

    The total turnover within two years is $143.055.000. With a pessimistic assumption of %10
    revenue, we expect $14.305.500 profit from sales within first two years.
    The net profit for the first two years, after calculated total cost, is expected to be
    $10,761,500.

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