Baker Adhesive Case Essay

Total Sales Dollars (for covering each incremental dollar of advertising) = $200,000 / $150,000 = $1.33

b. The optimal transfer price is $0.99, giving a buy-back price of $0.988, and channel profits of $372.62. However, this is an unrealistic scenario because Ralph’s profits are negative at -$24 and

3- As we can see the company would loss 0.52 cent per 1 kg if it decides to sell at 6.85 price and allocates the fixed expenses at 1.20 per 1 kg.

Martinez Company’s relevant range of Production is 7,500 to 12,500 units. When it produces and sells 10,000 units, its unit costs are as follows:

* The variances are due to the Mile High Cycle company not forecasting for increased production. The company budgeted for the production of 10,000 cycles but the actual production was 10,800 units. When the company increased production, the production efficiency decreased. The company had to use or rework parts that added extra cost to the expenses; the reworked parts added $25,000 of extra expenses to the wheel assembly production and $45,000 to the final assembly process. The material,

($372 + $135 + 500) / ($2.21 - ($0.83 + .40)) = 1,028 [+/- 31]

While doing the financial analysis it is important to calculate the unit price first. Using the wholesale price rather than the retail price, the calculated unit price is $95. Next, we

If Marlene Herbert were to discontinue place mats, he would miss $270,000 that will go toward Mendel paper company fixed cost. The company currently has a plant overhead that is estimated at $420,000 for the quarter. In addition to the fixed plant overhead, the plant incurs fixed selling and administrative expenses per quarter of $118,000. This draws the company to a total fixed cost of $538,000. If Marlene Herbert were to discontinue the second highest contributor to the fixed cost, he would need to increase the volume of computer paper and lower material cost to help pull the contribution margin of the lowest product up to help support the lost of a whole product line.

If the budget for a line-item is $1,000 and 10% is assigned to a particular function (such as General Program), then if an additional 6% is added to that function (due to 3 new projects with 2% per new project) the new budget for that function is [10% + (3 x 2%)] multiplied by the original budget for that line item. In this case, .16 x $1,000 = $160 while the budget for the entire line-item is $1,000 x 1.06 = $1,060.

However, a proposed plan may be to increase prices within a particular channel, namely the mass merchandisers. In line with exhibit 3, which shows the only total year volume growth for CY00 in all channels of 3.5%, an acceptable price increase is 5% for this particular channel. Based on the weighted average price increases (exhibit 4) of Royal Oak and Private Label, a 5% increase for Kingsford sits between the increases of the last year that were offered by both these brands, exempting the instant 15# category.

Eire Papers, Ltd Costs to Birch Paper Company = $391 that being $432 less sourcing profits from Southern Division ($90 x 40%) = $36 and Thompson Division Contribution $5 = $391

Through similar calculations of the first synthetic bond, she found that she needed 0.0704 units of the 2000 STRIP, and the price of this synthetic bond was $100.43.

The chemical is shipped in small plastic drums at a price of $1450 a piece. Demand for the

(When you last ordered the cost of that material was about to increase industry wide by about $0.03 lb.)

Conversely, if Masters decided to introduce the 10 ounce can while continuing to produce the 5.5 ounce tube of gel she could expect an approximate net financial increase of $86,244.36~. (Exhibit 4)