Free

MOD 3 CA ACC - Essay Example

Comments (0) Cite this document
Summary
The report aims at discussing the outcome of these options and the best strategy is chosen based on the estimated net income.
Wally…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97.3% of users find it useful
MOD 3 CA ACC
Read TextPreview

Extract of sample "MOD 3 CA ACC"

XXXXX Number: XXXXX XXXXX XXXX XXXXX XX – XX – The Smell of Success
In order to identify the best suited strategy to put the Lovely Scent Company back on a profitable track, the four options proposed are analyzed. The report aims at discussing the outcome of these options and the best strategy is chosen based on the estimated net income.
Reduction in Price:
Wally Workshard has suggested a price reduction by 20 % ($ 28 per unit) which will in turn increase the demand for the product. The increased demand is estimated to be 85,000 additional units per year. The effect of these changes on the company’s income is presented in Appendix 1. It is evident that the company will still incur a loss of $ 1.72 million.
Repackaging in Designer Bottles:
The Chief Financial Officer of the company, Lester Ledger, feels that the product lacks the aesthetic appeal and suggests repackaging them in designer bottles. This will increase the variable cost per unit by $ 4.75 and the fixed production costs will increase by $ 40,000 per year. He predicts that the sales volume will increase by 32 % (264,000 units). However, the increase in sales does not outdo the increased costs and the company will incur a loss of $ 1.334 million (as shown in Appendix 2).
Reduction in the Bottle Size:
According to the Production Manager, Buster Bumble, the reduction in the standard size of the bottle by 10 % would drop the variable costs by $ 2.65 (amounts to $ 13.35 per unit). However, due to the reduced size, the sales will drop to $ 195,500 units. Though the contribution margin is considerably increased, the company still incurs a loss of $ 549,425 (as shown in Appendix 3).
Improved Marketing:
The marketing manager suggests that the product requires more promotion and an increase of marketing budget by $ 527,000 will be appropriate. This, combined with a price increase by $4.90 per unit will increase the sales volume by 17 % (234,000 units). The contribution margin is considerably increased as both the sales volume and the unit prices are higher than before. The increase in the contribution margin is significantly higher than that of the fixed costs and hence results in a profit of $ 129,600 (Appendix 4).
Recommendation:
It is evident from the above analysis that the first three proposals still result in a heavy loss for The Lovely Scent Perfume Company. The proposal made by the marketing manager indicates an estimated profit of $ 129,600. Hence it is recommended that the company should increase the marketing budget (by $ 527,000) and also increase the price by $ 4.90 per unit.
Appendix 1 - Reduction in Price:
Inputs





Number of Units Produced and Sold
285,000.00

Revenue per unit
28.00

Variable production costs per unit
16.00

Fixed production costs per year
2,750,000.00

Variable operating costs per unit
4.00

Fixed operating costs per year
1,250,000.00








Lovely Scent Perfume Company




Contribution Margin Income Statement




For the Year Ended December 31, 2006








Revenue

7,980,000.00


Variable Costs
5,700,000.00


Contribution Margin
2,280,000.00


Fixed Costs
4,000,000.00


Net Income
-1,720,000.00






Appendix 2 - Repackaging in Designer Bottles:
Inputs





Number of Units Produced and Sold
264,000.00

Revenue per unit
35.00

Variable production costs per unit
20.75

Fixed production costs per year
2,790,000.00

Variable operating costs per unit
4.00

Fixed operating costs per year
1,250,000.00








Lovely Scent Perfume Company




Contribution Margin Income Statement




For the Year Ended December 31, 2006








Revenue

9,240,000.00


Variable Costs
6,534,000.00


Contribution Margin
2,706,000.00


Fixed Costs
4,040,000.00


Net Income
-1,334,000.00






Appendix 3 - Reduction in the Bottle Size:
Inputs





Number of Units Produced and Sold
195,500.00

Revenue per unit
35.00

Variable production costs per unit
13.35

Fixed production costs per year
2,750,000.00

Variable operating costs per unit
4.00

Fixed operating costs per year
1,250,000.00








Lovely Scent Perfume Company




Contribution Margin Income Statement




For the Year Ended December 31, 2006








Revenue

6,842,500.00


Variable Costs
3,391,925.00


Contribution Margin
3,450,575.00


Fixed Costs
4,000,000.00


Net Income
-549,425.00






Appendix 4 - Improved Marketing:
Inputs





Number of Units Produced and Sold
234,000.00

Revenue per unit
39.90

Variable production costs per unit
16.00

Fixed production costs per year
2,750,000.00

Variable operating costs per unit
4.00

Fixed operating costs per year
1,777,000.00








Lovely Scent Perfume Company




Contribution Margin Income Statement




For the Year Ended December 31, 2006








Revenue

9,336,600.00


Variable Costs
4,680,000.00


Contribution Margin
4,656,600.00


Fixed Costs
4,527,000.00


Net Income
129,600.00





Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“MOD 3 CA ACC Essay Example | Topics and Well Written Essays - 500 words”, n.d.)
MOD 3 CA ACC Essay Example | Topics and Well Written Essays - 500 words. Retrieved from https://studentshare.org/miscellaneous/1569295-mod-3-ca-acc
(MOD 3 CA ACC Essay Example | Topics and Well Written Essays - 500 Words)
MOD 3 CA ACC Essay Example | Topics and Well Written Essays - 500 Words. https://studentshare.org/miscellaneous/1569295-mod-3-ca-acc.
“MOD 3 CA ACC Essay Example | Topics and Well Written Essays - 500 Words”, n.d. https://studentshare.org/miscellaneous/1569295-mod-3-ca-acc.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF MOD 3 CA ACC

ITM 301 MOD 3 CA

...? (Assignment) Article Review In the article ‘The CIO Who Admitted Too Much’, Evan Schuman addresses the issue of Shawn Schwegman’s prediction of a possible failure in creating effective databases to meet the administrative demands of Oversstock.com as its CIO and his writing a letter admitting his failure to the company’s stakeholders. In the opinion of Strassmann (as cited in Gray), information management is the responsibility of CEO while information technology is the duty of CIO. Thus, it becomes evident that Schwegman, the CIO, went wrong by communicating directly to the stakeholders, especially a prediction that can hamper the growth of the company. The most interesting thing about the article is the honesty exhibited... (Assignment)...
3 Pages(750 words)Essay

ART 101 CA MOD 3

...ART 101 CA MOD 3 Impressionism originated from artists from Paris in the 19th century, which made the artists to be well-known in the 1870s due to their unique and enticing artwork. Impressionism involves images made from light and thin strokes of paint. These images when viewed at different angles against light, bring out different impressions. This includes movement, which brings the pictures made closer to the real, practical world. The pictures are bright, and pulsating with a lot of color and most of them are outdoor scenes. At that time in the 19th century, the impressionists had gone against the rules of painting and some critiques referred to their exhibitions as unfinished...
3 Pages(750 words)Essay

ACC 202 MOD 5 CA

...Yes Yes Offer No. 3 $295 300 No Yes Harry Hustler   Offer No. 1 $305 50 Yes Yes Offer No. 2 $200 250 No No Offer No. 3 $300 100 Yes Yes Offer No. 4 $330 75 Yes Yes Gary Giftofgab   Offer No. 1 $305 250 Yes Yes Offer No. 2 $245 400 No No Offer No. 3 $325 100 Yes Yes Ms. Goodperson         Offer $290 700 No Yes Total units sold 925 1,925 It is evident that Paul Peco would have sold 1,925 units in the last month. Assuming a constant demand every month, Paul Peco will easily be able to sell 20,000 units in the first year. The last month’s contribution margin income statements for the two rules are presented below. Details Actual Results Revised Income No....
2 Pages(500 words)Essay

ECO 202 MOD 3 CA

...To 2 June  ECO 202 MOD 3 CA Q1. The Federal Reserve policy makers use several different tools to influence the money supply and interest rates. Identify and briefly describe these tools. Include in your answer the difference between expansionary and contractionary monetary policies. Q2. The link below takes you to a site that shows you various Treasure security yields and how short and long-term yields differ. This is called the term structure of interest rates and when graphed it is called a yield curve. What is the relationship between short and long-term interest rates as the time to maturity of the debt...
4 Pages(1000 words)Essay

CMG301 MOD 3 CA

...Payment The total cost for the above described work is $1000. Upon signing the contract, the is required to pay a deposit of $250. This is refundable only if the contractor does not complete the stipulated repairs within the agreed time frame. Upon completion of the repairs the contractor will provide the customer with a detailed invoice confirming the work done. The remaining $750 must be paid within 30 days following the customers’ receipt of this invoice unless revised arrangements are agreed to by the contractor. If the customer is not satisfied with the work performed, they must so advise the contractor in writing within 14 days of receipt of the repair invoice, stipulating what they consider... The total cost for...
2 Pages(500 words)Essay

MKT301 MOD 3 CA

... Promotion Strategies Select TWO product/target market combinations from the table of product categories and associated target markets above and using the teaching materials and any additional research: Explain what you think would be an appropriate promotions strategy for both of them. In doing so compare and contrast the two promotions strategies explaining why you think they would be similar or different. Promotion strategies refer to well planned, formulated and strategized phenomenon that enables the brand offered to become a household name. The success of any promotion strategy depends on the implementation of such strategies. Based on the fact that, promotion is an essential in the development of a marketing plan... Promotion...
5 Pages(1250 words)Essay

BUS205 MOD 3 CA

... McDonalds’ blank contract McDonalds has successfully dominated the fast food industry around the world. The company remains vibrant in its operations and competitive in comparison to its rivals. The position of this company in the industry it operates in is characterized by enormous contracting between the company and other parties that are central to its operations. The supply chain for example is critical in ensuring deliveries are met in due time when demanded. It is also important for the company to effectively and efficiently meet the ever rising fast foods demand, given its customer base locally and internationally. Blank contracts are evident across McDonalds’ operations. They range from supplies, transportation... McDonalds’ blank...
2 Pages(500 words)Essay

HIS 101 MOD 3 CA

...effectively communicate. As mobile phones continue to penetrate, their social impact will as well continue to be great and will continue being greater as time progresses. Through the use of the mobile phones, social relations have become easier to maintain as well as extension of social networks. Work Cited Kendall, D. Sociology in our times: The essentials(4th ed.). Belmon, CA: Wadsworth Tompson, 2004. Print Ling, R. The adoption, use, and socialconsequences of mobile communication. Telektronikk, p 69-81. 2004. print  Wong, C.C & Hiew, P L. Factors influencing the adoption of mobile entertainment : Empirical evidence from a Malaysian survey. In W. Brookes, E. Lawrence. R. Steele, & E. Chang (Eds.), Proceedings of the...
5 Pages(1250 words)Essay

CMG401 MOD 3 CA

...earlier. Together with that, the numbers of gallons for soliciting purposes also remain fixed. The first amendment to solicitation SP0600-10-R-0208 was in January 20, 2010 at 10:30 am. As well, amendment 3 with the same solicitation number (Solicitation SP0600-10-R-0208) in November 30, 2010 at 10:30 am. In the latter amendment or amendment 3 includes the following changes to the proposal program; The delivery location changes from Baghad International Airport to ORER/Erbil Intl, Iraq for Jet A-1, w/o FSII for 244,800 USG and location ORSU/Sulaymaniyah Intl, Iraq for Jet A-1, w/o FSII for 61,200 USG. The solicitation base reference shall be in October 1 2010, at 1:00 pm local Fort Belvoir, VA time, and...
2 Pages(500 words)Essay

CMG490 MOD 5 CA

...Contracts and Contract Management Systems Sub Number Table of Contents Executive Summary 21.0 Introduction 3 2.0 Contracts 3 2.1 Benefits of CLM Solutions 4 3.0 Criminal trial process 6 3.1 Jury Selection 6 3.2 Oath and Preliminary Instructions 6 3.3 Jury Deliberations 8 3.4 Verdict 8 3.5 Sentencing 8 4.0 Contract Management Systems 9 4.1.0 Projectmate 12 4.1.1 Strengths 12 4.1.2 Weakness 12 4.1.3 Opportunities 13 4.1.4 Threats 13 5.0 Conclusions 14 References 15 Executive Summary Benefits of Contract Lifecycle Management for the modern organization are numerous for both parties in a contract. Lifecycle of a contract is also encompassed in the CLM. The...
6 Pages(1500 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic MOD 3 CA ACC for FREE!

Contact Us