Barvo Carolina Case Study 1 Essay

5. Fixed costs can be discretionary or committed. Using your judgment based on the discussion in the case, identify which costs are likely to be discretionary. Assuming that management is able to decrease discretionary fixed costs by 10%, what would be the impact on Bridgestone’s break-even point revenues?

On August 1, 2009, Allfoods acquired Baked Beans. The Allfoods share price was $30 on the announcement date and $35 on the acquisition date. The parties agreed that Allfoods would issue the selling shareholders an additional one million shares if Baked Beans revenues for the 12-month period after the acquisition were at least $150 million. The fair value of the contingent consideration was determined to be $20 million as of the acquisition date. The value of the replacement stock option awards attributable to precombination services is $5 million, and the portion that relates to postcombination services is $7 million. Allfoods incurred $4 million of acquisition related costs.

To decide whether product line Grill A be dropped or not by Katy EH we will calculate contribution margin from Grill A. If the contribution margin becomes zero then we will suggest dropping the said product line otherwise not depending on other non-financial factors.

g. Springfield Express has an opportunity to obtain a new route that would be traveled 20 times per month. The company believes it can sell seats at $ 175 on the route, but the load factor would be only 60 percent. Fixed cost would increase by $ 250,000 per month for additional personnel, additional passenger train cars, maintenance, and so on. Variable cost per passenger would remain at $ 70.

6B. A fixed cost is the cost of an input whose quantity does not rise when output goes up, one that the firm requires to produce any output at all. The total cost of such indivisible inputs does not change when the output changes. Any other cost of the firm’s operation is called a variable cost.

5. If the business believes that the probability for increasing, stable and decreasing product demand are 0.4, 0.5, and 0.1, identify the best decision using the rule of maximum expected monetary value.

Nico and Frans could choose to create their own brand and sell unroasted coffee beans, roasted coffee beans, and roasted/decaffeinated beans to retailers. The brand would sell to retailers at approximately $4.57/kilo, because that is four times the retail price of 250 grams of coffee beans, (calculations and currency conversion shown in the appendix) and the retailers markup by small percentages. The brand would give the farmers at least $0.65, so Nico and Frans will still maintain a large profitable margin, and the

To decide upon a market structure, the objective of growth inside a company is also equally important. Furthermore, a company needs to have a clear vision of what level of operation is it working on. These levels of operation can be targeting the local market or the global market depending on the company’s vision.

Everyone needs to eat and many people will use a grill to cook their food. In looking at the supply and demand of barbecue grills, several terms will be defined, including economics, microeconomics, the law of supply, and the law of demand. Many factors can lead to a change in supply and demand, which will be reviewed prior to looking at an analysis of trends in barbecue grill consumption patterns. This detailed and difficult analysis is critical to businesses.

The Food Industry “TRENDS”, is a Costs incorporated into this Plan are based on Industry Trends. This Business Plan is derived from an optional definite Market Analysis. A Buffer is Included in the Start-up cost to guarantee that the business is not under-financed. We have additionally decided the customary and non-conventional hazard related with the disappointment of the eatery.

The optimal aggregate plan is one that results in the highest profit over the six month planning horizon. For now, given Red Tomato’s desire for a very high level of customer service, assume all demand is to be met, although it can be met late. Therefore the revenues earned over the planning horizon are fixed. As a result, minimizing cost over the planning horizon is the same as maximizing profit. In many instances, a company has the option of not meeting certain demand, or price itself may be a variable that a company has to determine based on the aggregate plan. In such a scenario, minimizing cost is not equivalent to maximizing profits.

Fixed Cost – costs that remain constant over a range of activity irrespective of the quantity produced

One day, Candy- the owner of Candy’s Coffee Cart had lunch with her childhood friend Blair – the owner of Blair’s Beans as a coffee beans and coffee equipment supplier. Blair has mentioned the launch of new coffee beans which met Candy’s requirement. So he suggested Candy of “22 two-kilogram bags of Sumatran coffee beans per month at his list price for five years”. And Candy accepted.

From the model above, one can see the outcome from the two decisions (because there are two decision nodes) that can be made: Low and High Average Demand, Initially Low Demand, High Initial, Low Subsequent Demand. It is up now to the decision makers to decide how to weigh and favorite each node and choice with probabilities and values in order to find the best payoff and therefore best decision. Remember that the model with the complete information added to it will not just reveal an answer, just give the management an insight into where the money is best and the direction the certain company should take, give there own preferences. One chairman of a company that thinks their product will only be popular in the market for a short period of time will probably make a different decision for the future of his company rather than a chairman that thinks his product will

The business Coffee Call is run by Cathy. Coffee Call is a Wellington based coffee bean roaster. Coffee Call has gradually grown from a small business with only a few customers , (with Cathy doing all the hard work) to a successful business with 4 fulltime and 2 part time employees, the part time employees work “on call” therefore meaning they do not have specific duties however do help out in the office as well as with local deliveries . Cathy sells two types of coffe beans , Arabica and Robusta beans . They are imported from all over the world and are purchased from an Auckland based supplier called ‘Global Beanz’ . The cost of the coffee beans per kilogram is most likely to change from week to week