Trident University International Donica Jordan Andrea Module

Trident University Internationaldonica Jordan Andrademodule1 Slp Acco

Trident University International Donica Jordan-Andrade Module1 SLP: Accounting Cost Systems and Cost Behavior ACC501: Accounting for Decision Making Professor: Dr. Ron Spicer September 26, 2020 Morrlum Water Proof flooring materials ACCOUNTING COST SYSTEMS AND COST BEHAVIOR Product Description Morrlum Water Proof flooring materials MORRLUM is an institution intending to launch the sale and production of waterproof flooring materials in USA. The flooring industry is one that evolves as fast as the fashion industry. The population in America appreciates quality flooring materials based on uniqueness of such aspects as beauty, waterproof floors, pet and children friendly floors as well as quietness of floors.

Waterproof flooring materials occur in both vinyl planks and wood plank laminates. Various brands are available under this product line including and not limited to blue ridge vinyl plank floors, shady pine vinyl planks, and Tudor oak vinyl floors. This new product seeks to serve clients who accommodate children and pets, this is because of their ease of cleaning, soft underfoot, durability, and water resistivity. Waterproof flooring materials can fit in any room of a house including kitchens, bathrooms, etc. The products have layers including the scratch resistive layer, decorative layer, hydraulic layer, and the ultra-quiet pad, making them ideal for sound dampening.

Cost Estimates & Pricing Suggestions

The following is cost and pricing model estimates for Morrlum at the start of the year 2020. Fixed costs include renting expenses ($27,000), licensing costs ($4,000), insurance ($50,000), and other costs ($3,000). Variable costs encompass delivery costs ($8,940), labour ($20,000), commissions ($3,570), raw materials ($130,000), and other variable costs ($2,360). The total costs amount to $248,870. The sales for flooring materials are based on square feet, with suggested prices ranging from $2.20 to $3.80, and an average price of $3.00. To break even, sales of approximately 82,956 square feet are required. The projected sales target for 2020 is 90,000 square feet. The pricing model aligns with competitor ranges and break-even considerations, taking into account market positioning and sales goals.

Approach To Determine Pricing

The approach to pricing involves considering factors such as target sales, break-even points, and competitors' pricing strategies. The pricing seeks to balance competitiveness with profitability, setting the price within a range that ensures market acceptance while covering costs. The industry-standard competitor pricing ranges from $2.50 to $5.00, and Morrlum’s pricing strategy considers these ranges to position its product favorably in the marketplace. The pricing model aims to attract sales volume without sacrificing profit margins, adjusting dynamically based on market response and cost fluctuations.

Rationale For Pricing Approach

Morrlum, as a new entrant in the flooring industry, adopts a strategic pricing approach that emphasizes benchmarking against competitors, targeting sufficient sales volume to reach break-even points, and ensuring flexibility to respond to market conditions. Monitoring market acceptance and adjusting prices accordingly helps avoid negative impacts on sales momentum. The focus remains on securing a competitive position, responding to consumer preferences, and ensuring profitability through a balanced pricing strategy that considers both industry standards and internal cost structures.

SWOT Analysis Example

In analyzing Morrlum Waterproof Flooring Materials, a comprehensive SWOT analysis is crucial for strategic planning. Key strengths include product durability, water resistivity, and ease of maintenance. Weaknesses might involve higher initial costs or limited brand recognition. Opportunities encompass expanding market share among pet and family-oriented consumers, while threats involve fierce competition and fluctuating raw material prices. A detailed SWOT action plan focuses on leveraging strengths like product quality, minimizing weaknesses such as brand awareness, capitalizing on opportunities like targeted marketing, and mitigating threats through competitive analysis and cost management.

References

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