Deck 14: Cases Inappying Evc: Micromini Computer and Acme Fasteners

Question 1

Once the decision was made to introduce the "complete meal" product and to advertise it according to the plan, what was the impact on profit in 1966 (before taxes) of selling 30 tons at a retail price of Cr. 8.20

Answer 1

The impact on the profit can be seen through the following table:
It can be seen clearly that the impact on the profits is only $41,400, it was projected that the sales would be approximately 85 tons, but had been only 30 tons, and thus the impact on the profits had been less.

Question 2

Once the decision had been made to introduce the "complete meal" product and to advertise it according to plan, what would have been the impact on profit in 1966 (before taxes) if 85 tons had been sold at a retail price of Cr. 6.85

Answer 2

The impact on the profit if 85 tons would have been sold can be seen through the following table:
It can be seen clearly that the impact on the profits is only $90,950. The impact on the profits is higher when 85,000 kg would have been sold.

Question 3

Combining questions 1 and 2, which retail price would produce more incremental profit for the firm in 1966, and how much more

Answer 3

The impact on the profit can be seen through the following table:
The impact can be seen that the profit is more when 85,000 kg of "CM" is sold at $6.85 per kg instead of selling 30,000 kg at $8.20 per kg.

Question 4

What sales volume is required at a retail price of Cr. 6.85 to give the same profit impact in 1966 (before taxes) as selling 30 tons at a retail price of Cr. 8.20

Question 5

What is the total unit cost and per unit profit for 1 Kg of "complete meal" at a retail selling price of Cr. 6.85 and with an allocation of Cr. 1.20 for production fixed expenses

Question 6

How much production fixed expense should be allocated to 1Kg of "complete meal " Give a specific number and your logic to support the number.

Question 7

What is your recommendation to management regarding the new "complete meal" product for 1967