In the analysis that leads to decision making about this assignment involves break-even analysis. Pricing decisions are aimed at making decisions that are beneficial in the end. Business are formed with aim of profits, therefore business executive are willing to base their decisions on the criterion of maximizing the expected valu of returns.
This is a norm with any executive who is interested in the success of her or his business. The aim of maximizing expected value or return is always as a simple way to generate best results that helps in the profit making. There in this the breakeven price for the contract will be as follows;
The management should go a head with the project if the contact price is 1,224 or more. If they the price is below that figure then they be operating at a loss. This is possible if operating factors are kept constant. If the factors change then a new analysis ought to be carried out.
Drury C; (2000); Management and cost Accounting; 5th edition ,business press Thomson Learning,