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Bliss Bar is a company that sells deluxe chocolate and candy bars based in Illinois. The company is considering launching a new product line featuring protein bars coated with their deluxe chocolate flavors. Bliss Bar has spent $75,000 developing a new protein bar line as a part of the company’s product diversification plan. It also spent another $40,000 for
Based on market research, Bliss Bar expects first year sales of 1,200,000 protein bars at a price of $2.45 per unit with an expected annual growth of 3% in sales volume each year of the six-year project. The variable costs per unit are $0.80, and the annual fixed costs are $30,000.
Bliss Bar estimates that the net working capital will be 8% of next year’s sales.
The launch of this new product line is expected to cannibalize the sales of an existing candy bar, Choco-O! by 10,000 units per year. Choco-O! is sold at a price of $2 per unit and has variable costs of $0.50 per unit.
To expand production capacity for this new product line, Bliss Bar is required to have an initial investment of $700,000 in factory equipment. The equipment will be
The company’s tax rate is 20%, and its cost of capital is 7.6%. However, the finance team suggests that the appropriate project discount rate should be higher as the company has no prior experience in making protein bars. The current market premium is 7%, and the risk-free rate is 4%. Bliss Bar’s Beta is 1.20, and the project is deemed to be 3 times riskier.
What will be the Book Value of the factory equipment at the end of year 2?
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- Brahma Industries sells vinyl replacement windows to home improvement retailers nationwide. The national sales manager believes that if they invest an additional $25,000 in advertising, they would increase sales volume by 10,000 units. Prepare a forecasted contribution margin income statement for Brahma if they incur the additional advertising costs, using this information:Heavenly Chocolates manufactures and sells quality chocolate products at its plant and retail store located in Saratoga Springs, New York. Two years ago, the company developed a web site and began selling its products over the Internet. Web-site sales have exceeded the company’s expectations, and management is now considering strategies to increase sales even further. To learn more about the web-site customers, a sample of 50 Heavenly Chocolate transactions was selected from the previous month’s sales. Data showing the day of the week each transaction was made, the type of browser the customer used, the time spent on the web site, the number of web pages viewed, and the amount spent by each of the 50 customers are contained in the file named Heavenly Chocolates. A portion of the data is shown in the table that follows: Heavenly Chocolates would like to use the sample data to determine whether online shoppers who spend more time and view more pages also spend more money during their visit to the web site. The company would also like to investigate the effect that the day of the week and the type of browser have on sales. Managerial Report Use the methods of descriptive statistics to learn about the customers who visit the Heavenly Chocolates web site. Include the following in your report. Graphical and numerical summaries for the length of time the shopper spends on the web site, the number of pages viewed, and the mean amount spent per transaction. Discuss what you learn about Heavenly Chocolates’ online shoppers from these numerical summaries. Summarize the frequency, the total dollars spent, and the mean amount spent per transaction for each day of week. Discuss the observations you can make about Heavenly Chocolates’ business based on the day of the week? Summarize the frequency, the total dollars spent, and the mean amount spent per transaction for each type of browser. Discuss the observations you can make about Heavenly Chocolates’ business based on the type of browser? Develop a scatter diagram, and compute the sample correlation coefficient to explore the relationship between the time spent on the web site and the dollar amount spent. Use the horizontal axis for the time spent on the web site. Discuss your findings. Develop a scatter diagram, and compute the sample correlation coefficient to explore the relationship between the number of web pages viewed and the amount spent. Use the horizontal axis for the number of web pages viewed. Discuss your findings. Develop a scatter diagram, and compute the sample correlation coefficient to explore the relationship between the time spent on the web site and the number of pages viewed. Use the horizontal axis to represent the number of pages viewed. Discuss your findings.Bienestar, Inc., has two plants that manufacture a line of wheelchairs. One is located in Kansas City, and the other in Tulsa. Each plant is set up as a profit center. During the past year, both plants sold their tilt wheelchair model for 1,620. Sales volume averages 20,000 units per year in each plant. Recently, the Kansas City plant reduced the price of the tilt model to 1,440. Discussion with the Kansas City manager revealed that the price reduction was possible because the plant had reduced its manufacturing and selling costs by reducing what was called non-value-added costs. The Kansas City manufacturing and selling costs for the tilt model were 1,260 per unit. The Kansas City manager offered to loan the Tulsa plant his cost accounting manager to help it achieve similar results. The Tulsa plant manager readily agreed, knowing that his plant must keep pacenot only with the Kansas City plant but also with competitors. A local competitor had also reduced its price on a similar model, and Tulsas marketing manager had indicated that the price must be matched or sales would drop dramatically. In fact, the marketing manager suggested that if the price were dropped to 1,404 by the end of the year, the plant could expand its share of the market by 20 percent. The plant manager agreed but insisted that the current profit per unit must be maintained. He also wants to know if the plant can at least match the 1,260 per-unit cost of the Kansas City plant and if the plant can achieve the cost reduction using the approach of the Kansas City plant. The plant controller and the Kansas City cost accounting manager have assembled the following data for the most recent year. The actual cost of inputs, their value-added (ideal) quantity levels, and the actual quantity levels are provided (for production of 20,000 units). Assume there is no difference between actual prices of activity units and standard prices. Required: 1. Calculate the target cost for expanding the Tulsa plants market share by 20 percent, assuming that the per-unit profitability is maintained as requested by the plant manager. 2. Calculate the non-value-added cost per unit. Assuming that non-value-added costs can be reduced to zero, can the Tulsa plant match the Kansas City per-unit cost? Can the target cost for expanding market share be achieved? What actions would you take if you were the plant manager? 3. Describe the role that benchmarking played in the effort of the Tulsa plant to protect and improve its competitive position.
- Global Reach, Inc., is considering opening a new warehouse to serve the Southwest region. Darnell Moore, controller for Global Reach, has been reading about the advantages of foreign trade zones. He wonders if locating in one would be of benefit to his company, which imports about 90 percent of its merchandise (e.g., chess sets from the Philippines, jewelry from Thailand, pottery from Mexico, etc.). Darnell estimates that the new warehouse will store imported merchandise costing about 16.78 million per year. Inventory shrinkage at the warehouse (due to breakage and mishandling) is about 8 percent of the total. The average tariff rate on these imports is 5.5 percent. Required: 1. If Global Reach locates the warehouse in a foreign trade zone, how much will be saved in tariffs? Why? (Round your answer to the nearest dollar.) 2. Suppose that, on average, the merchandise stays in a Global Reach warehouse for nine months before shipment to retailers. Carrying cost for Global Reach is 6 percent per year. If Global Reach locates the warehouse in a foreign trade zone, how much will be saved in carrying costs? What will the total tariff-related savings be? (Round your answers to the nearest dollar.) 3. Suppose that the shifting economic situation leads to a new tariff rate of 13 percent, and a new carrying cost of 6.5 percent per year. To combat these increases, Global Reach has instituted a total quality program emphasizing reducing shrinkage. The new shrinkage rate is 7 percent. Given this new information, if Global Reach locates the warehouse in a foreign trade zone, how much will be saved in carrying costs? What will the total tariff-related savings be? (Round your answers to the nearest dollar.)Bliss Bar is a company that sells deluxe chocolate and candy bars based in Illinois. The company is considering launching a new product line featuring protein bars coated with their deluxe chocolate flavors. Bliss Bar has spent $75,000 developing a new protein bar line as a part of the company’s product diversification plan. It also spent another $40,000 for market research on flavors to produce. Based on market research, Bliss Bar expects first year sales of 1,200,000 protein bars at a price of $2.45 per unit with an expected annual growth of 3% in sales volume each year of the six-year project. The variable costs per unit are $0.80, and the annual fixed costs are $30,000. Bliss Bar estimates that the net working capital will be 8% of next year’s sales. The launch of this new product line is expected to cannibalize the sales of an existing candy bar, Choco-O! by 10,000 units per year. Choco-O! is sold at a price of $2 per unit and has variable costs of $0.50 per unit. To expand…Bliss Bar is a company that sells deluxe chocolate and candy bars based in Illinois. The company is considering launching a new product line featuring protein bars coated with their deluxe chocolate flavors. Bliss Bar has spent $75,000 developing a new protein bar line as a part of the company’s product diversification plan. It also spent another $40,000 for market research on flavors to produce. Based on market research, Bliss Bar expects first year sales of 1,200,000 protein bars at a price of $2.45 per unit with an expected annual growth of 3% in sales volume each year of the six-year project. The variable costs per unit are $0.80, and the annual fixed costs are $30,000. Bliss Bar estimates that the net working capital will be 8% of next year’s sales. The launch of this new product line is expected to cannibalize the sales of an existing candy bar, Choco-O! by 10,000 units per year. Choco-O! is sold at a price of $2 per unit and has variable costs of $0.50 per unit. To expand…
- Bliss Bar is a company that sells deluxe chocolate and candy bars based in Illinois. The company is considering launching a new product line featuring protein bars coated with their deluxe chocolate flavors. Bliss Bar has spent $75,000 developing a new protein bar line as a part of the company’s product diversification plan. It also spent another $40,000 for market research on flavors to produce. Based on market research, Bliss Bar expects first year sales of 1,200,000 protein bars at a price of $2.45 per unit with an expected annual growth of 3% in sales volume each year of the six-year project. The variable costs per unit are $0.80, and the annual fixed costs are $30,000. Bliss Bar estimates that the net working capital will be 8% of next year’s sales. The launch of this new product line is expected to cannibalize the sales of an existing candy bar, Choco-O! by 10,000 units per year. Choco-O! is sold at a price of $2 per unit and has variable costs of $0.50 per unit. To expand…Bliss Bar is a company that sells deluxe chocolate and candy bars based in Illinois. The company is considering launching a new product line featuring protein bars coated with their deluxe chocolate flavors. Bliss Bar has spent $75,000 developing a new protein bar line as a part of the company’s product diversification plan. It also spent another $40,000 for market research on flavors to produce. Based on market research, Bliss Bar expects first year sales of 1,200,000 protein bars at a price of $2.45 per unit with an expected annual growth of 3% in sales volume each year of the six-year project. The variable costs per unit are $0.80, and the annual fixed costs are $30,000. Bliss Bar estimates that the net working capital will be 8% of next year’s sales. The launch of this new product line is expected to cannibalize the sales of an existing candy bar, Choco-O! by 10,000 units per year. Choco-O! is sold at a price of $2 per unit and has variable costs of $0.50 per unit. To expand…Bliss Bar is a company that sells deluxe chocolate and candy bars based in Illinois. The company is considering launching a new product line featuring protein bars coated with their deluxe chocolate flavors. Bliss Bar has spent $75,000 developing a new protein bar line as a part of the company’s product diversification plan. It also spent another $40,000 for market research on flavors to produce. Based on market research, Bliss Bar expects first year sales of 1,200,000 protein bars at a price of $2.45 per unit with an expected annual growth of 3% in sales volume each year of the six-year project. The variable costs per unit are $0.80, and the annual fixed costs are $30,000. Bliss Bar estimates that the net working capital will be 8% of next year’s sales. The launch of this new product line is expected to cannibalize the sales of an existing candy bar, Choco-O! by 10,000 units per year. Choco-O! is sold at a price of $2 per unit and has variable costs of $0.50 per unit. To expand…
- Bliss Bar is a company that sells deluxe chocolate and candy bars based in Illinois. The company is considering launching a new product line featuring protein bars coated with their deluxe chocolate flavors. Bliss Bar has spent $75,000 developing a new protein bar line as a part of the company’s product diversification plan. It also spent another $40,000 for market research on flavors to produce. Based on market research, Bliss Bar expects to sell 1,200,000 protein bars at a price of $2.45 per unit over each of the next six years, with an expected annual growth of 3% in sales volume. The variable costs per unit are $0.80, and the annual fixed costs are $30,000. Bliss Bar estimates that the net working capital will be 8% of next year’s sales. Assume all net working capital will be recovered at the end of the project. The launch of this new product line is expected to cannibalize the sales of an existing candy bar, Choco-O! by 10,000 units per year. Choco-O! is sold at a price of $2 per…Bliss Bar is a company that sells deluxe chocolate and candy bars based in Illinois. The company is considering launching a new product line featuring protein bars coated with their deluxe chocolate flavors. Bliss Bar has spent $75,000 developing a new protein bar line as a part of the company’s product diversification plan. It also spent another $40,000 for market research on flavors to produce. Based on market research, Bliss Bar expects to sell 1,200,000 protein bars at a price of $2.45 per unit over each of the next six years, with an expected annual growth of 3% in sales volume. The variable costs per unit are $0.80, and the annual fixed costs are $30,000. Bliss Bar estimates that the net working capital will be 8% of next year’s sales. Assume all net working capital will be recovered at the end of the project. The launch of this new product line is expected to cannibalize the sales of an existing candy bar, Choco-O! by 10,000 units per year. Choco-O! is sold at a price of $2 per…Winnebagel Corp. currently sells 39,089 motor homes per year at $41,847 each, and 10,363 luxury motor coaches per year at $118,784 each. The company wants to introduce a new portable camper to fill out its product line; it hopes to sell 16,138 of these campers per year at $11,428 each. An independent consultant has determined that if Winnebagel introduces the new campers, it should boost the sales of its existing motor homes by 4,091 units per year, and reduce the sales of its motor coaches by 1,489 units per year. What is the amount to use as the annual sales figure when evaluating this project?
