# South Delaware Coors, Inc Essay

814 Words Oct 26th, 2008 4 Pages
Case # 4

South Delaware Coors, Inc.

10/28/2008

Problem Statement
Which research studies should Larry ask Mason and Associates to complete? Upon consideration of the research study results, is this new business venture a go?

Alternatives
Larry has several different options to choose from with respect to research studies that can be completed. As long as he stays at or under his \$15,000 budget he can request that any combination of studies be completed by Mason and Associates. Larry was presented with 9 different research studies that may be of assistance to him in deciding whether or not this truly is a ‘golden’ opportunity.
The second part of the problem statement requires only two alternatives: To go ahead
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A price estimate of a 6-pack of bottle Coors beer today is \$5.59, and using the Consumer Price Index for 1990 it was determined that a 6-pack of bottle Coors cost approximately \$3.43 (see Appendix A-2). Using Study F Cost of Goods Sold is 77.1% of sales. The contribution margin was then calculated as 22.9%. Fixed costs summed up to be about \$250,000 including salaries, equipment & land depreciation, utilities, insurance, taxes, maintenance and janitorial services, and other miscellaneous expenses. Break-even Sales computed from the aforementioned figures turns out to be \$1,211,790.39 (see Appendix A-4). Variable Costs per unit were determined using the contribution margin and price variables, and the result came to \$2.65 (see Appendix A-4). Break-even quantity then was calculated at around 320,513 units, or gallons in 1990 (see Appendix A-5). A 6-pack of bottle beers holds approximately 72 fluid ounces, this makes up about 0.5625 gallons resulting in a price of roughly \$5.35 per gallon (see Appendix A-6). Projected demand of beer in 1990 in South Delaware is about 5,400,397 (see Appendix A-1) and the Coors estimated market share of this demand according to Study C is 8.9% which computes to 480,635 gallons, therefore projected sales of Coors in the 2 county South Delaware distribution area is around \$2,573,404.10 in 1990 (see Appendix A-7). The break-even market share of Coors in the 2 county distribution area of