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The paper "Juice Pty Limited Marketing" is an outstanding example of a marketing case study. Top juice pty limited is a sole proprietorship situated in Australia and enjoys the privileges of a sole proprietorship form of business organization. …
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Table of content
Executive summary
Business description
Marketing plan
Operating plan
Environmental management plan
Financial plan
Conclusion
Business description
Top juice pty limited is a sole proprietorship situated in Australia and enjoys the privileges of a sole proprietorship form of business organization. The business currently deals with production of juice products such as Mango surprise; pineapple and Mango puree to its client and majorly supply its product to a high quality restaurant. The objective of the business is to reach many suppliers both local and international client. The company currently conducts its business in-stores and some of the key personnel in the business are sale representative who visit the restaurant frequently. The staff is significant to company success since the business currently is investing heavily on marketing the business product in order to take advantage of the supernormal growth on the new product that is yet to be exploited.
The business currently intends to expand its level of sales in order to meet the customer’s demand as well taking advantage of the supernormal profit of the new product. The company’s budgeted sales depict a constant flow of sales as well as profit from the anticipated sales level and hence, there will be high return from the new venture. The only limiting factor to the business proposal is capital and thus the c company is in need of funds to finance the new venture.
Marketing Plan
The company intends to sale its product on a 90% sales receipt basis in the first month of the sales and the remaining 10% in the preceding month following the month of sales. This approach will help the company to reduce the risk of bad debt and improves on the profitability ratio. The forecasted sales budgeted is efficient and appropriate since its flexible to customers in paying as well as efficient to the company because a high returns is depicted from the sales of the new product. In respond to market condition, the business intends to expand its outlet in order to meet the demand from clients since; the business has performed an extensive research on the supply of the product. The business in recent times as created a long-term contact with suppliers from fruits cooperatives throughout Australia so as to secure the supply of mango puree and pulp, the diversity supply has offered the business with extended ripe mango. In this case supply of product to the business is enhanced and guaranteed meaning that the revenue to the company for each quarter is assured.
Operating plan
The business is having a close relation with its suppliers as well as the customers and therefore the company intends to build the reputation with its partners as well as the client in order to ensure that its product is bought in the market. To maintain a constant supply of the product in the market, The Company intends to add an additional product in the production as well as replacing the current refrigerator with a more cost effective one in order to save on cost as well as guarantee on the quality of its product. In order to provide a constant supply of electricity to refrigerate the company’s product, Installation of new solar panels is necessary and hence the business is in the process of installing the solar panel system (Jerry J. Weygandt 2009). This will in turn lead reduction of electricity expenditure as well providing, maximum protection on the product in store.
Cost reduction as well as profit maximization is the key management strategies that will adopt in order to maximize on the new product that the company currently intends to sell. The business therefore is putting measures in place in order to ensure that its operating cost is low.
Environmental management plan
The business is dedicated to supplying its product from different location in order to guarantee for environment safety. Providing the product from diverse places will reduce the chance of environment exploitation. The business as opted for solar power as a form of energy in order to ensure that the environment concern is well taken care off. The emission of the waste product such as water will be recycled and re-used. In this case there is no exploitation of the river and ecological concern. The manufacture’s product will store in a cool and dry place in order to guarantee for product quality. In line with product safety as well ecological matters, the business intend to ensure that the working environment is safe and secure for all workers. The business intends to enhance its safety department into a more sophisticated department that provide a standard working environment as well as the safety rules well adhered to by all worker. Employees will be awarded bonus for good performance as well as leave period. This is will help worker to develop positive mind towards working.
Corporate social responsibility is one of the key guideline in which the company is dedicated to adhering in line with the integrated reporting guideline instituted by the International financial reporting standard (Larry M. Walther 2012). This therefore will make the business as one of the most desired in the market as well as the suppliers of the product since, a business with good reputation attract suppliers as well as customers? This therefore is intended to ensure that there is an increase in the sales level from the current level to the anticipated higher level. In general, the profitability ratio as well as the liquidity will be enhanced
Financial plan
1).The break-even point for Mango juice
Break-even point= (Fixed cost/contribution margin per unit)
Contribution margin per unit= (sales-variable cost}/unit
Selling price per unit=$5
Variable cost per unit=$0.1
Total fixed cost=$216,000
Contribution margin per unit= (5-0, 1) =4.9 per unit.
Therefore Break-even point= (216,000/4.9) =$44,082
2) Quarterly budget for the period 1st April 2014 to 31st march 2015
2a) sale budget`
sales budget for quarters
Mango surprise
s.p
Total selling price
Pineapple and Mango
s.p
Total selling price
April-June 2014
18,000
5
90,000
14,000
4
56000
July-sept2014
12,000
5
60,000
8,000
4
32000
Oct-December 2014
35,000
5
175,000
20,000
4
80000
Jan-march 2015
40,000
5
200,000
28,000
4
112000
Total sales
105,000
5
525,000
70,000
280000
2b) Purchase Budget
Purchase Budget
Quarter 1
Quarter 2
Quarter 3
Quarter 4
TOTAL
April-June 2014
July-sept2014
Oct-December 2014
Jan-march 2015
0%
10%
40%
50%
100%
Mango juice
0
1200*1.54
14000*1.54
20,000*1.54
35,200*1.54
Total purchase cost
0
1,848
21,560
30,800
54,208
Pineapple
800*1.18
8000*1.18
14,000*1.18
22,800*1.18
Total purchase cost
0
944
9440
16,520
26,904
2c) Labor Budget
Labor cost
Mango Juice
Pineapple
Total
Labor cost per little
105000*0.55
70000*0.55
Total labor cost
57,750
38,500
96,250
2d).Selling expense
selling expense
Mango Juice
Pineapple
Total
Total variable selling cost
105000*0.1
70000*0.7
Total labor cost
10,500
49,000
59,500
2e).Administration fixed cost budget
Administration fixed cost Budget
Quarterly
Annually
54,000
216,000
2f). cash budget
Cash Budget
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Opening cash
25,000
38,463
40134
154,897
RECEIPT
Cash sales
90% receipt
131,400
82,800
229,500
280,800
10% receipt
14600
9200
25500
Debtors collection
0
0
0
0
Cash available
131,400
135,863
278,834
461,197
PAYMENT
Purchases
0
-2,792
-31,000
-47,320
wages and salaries
-24,062.50
-24,062.50
-24,062.50
-24,062.50
selling expense
-14875
-14875
-14875
-14875
Administration fixed expense
-54,000
-54,000
-54,000
-54,000
closing balance
38,463
40,134
154,897
320,940
2g).Projected income statement for the year ending 31st March 2015
Projected income statement for the year ending 31st March 2015
50
$0.00
Sales
805,000
cost of sales
Opening stock
184431
Add purchase
81,112
Less closing stock
-47,320
-218,223
Gross profit
586,777
Less Operating expenses
selling expense
59,500
labor cost
96,250
Administration expense
216,000
-371,750
Net profit
215,027
Retained earnings b/d
60,331
275,358
2h) Projected statement of financial position for the year ending 31st March 2015
Projected statement of financial position for the year ending 31st March 2015
000$
.00$
Non-current Asset
Refrigeration
40,000
Laptop and mf printer
3,600
Current Assets
cash at bank
320940
Inventory
47,320
Account receivable
31200
399,460
443,060
Financed by
equity (150,000 share
150,000
retained earning
275,358
Long-term liability
Long-term debt
35,000
460,358
Question three
Relevant cost for pineapple and mango in table 2 and 3
The relevant cost is the variable cost of production in which mango has a total variable cost of ($0.65*105,000=68,250) while pineapple is ($1.25*70,000=87,500} the incremental cost will create a contribution of (5-0.65)*105,000} =456,750 unit for mango and (4-1.25)*70,000} =192,500 for pine able.
Analysis of contribution margin and the incremental variable cost
Incremental variable cost
Contribution margin
Mango juice
68,250
456,750
Pineapple
87,500
192500
From the above analysis, it can be concluded that the contribution margin is higher than the incremental variable cost implying that the investment will yield a return inform of profit to the company.
Question four
Weighted contribution margin per unit
Weighted contribution margin= (Weight of mango+ weight of pineapple)*contribution margin
Weight of mango= {456,750/ (456750+192500)} =0.7
Weight of pineapple=1-0.7=-0.3
Therefore,
Weighted contribution margin=0.7*[456,750/105,000}+0.3{192,500/70,000)=
Weighted contribution margin per unit= (0.7*4.35) + (0.3*2.75) =$3.87
Expected profit therefore will be,
Expected profit= (total contribution-fixed cost)
Expected profit = (456,750=192,500)-216,000=$433,250
The combined production mix will generate a profit of $433,250 meaning that two production mix of a new product is worthwhile for investment and therefore a return from investment will be realized.
Question five
Net present value for mango juice and pineapple at 7% discounting rate
NPV= {discounted cash flow- Initial outlay}
Cash flow for mango juice= $ 456,750
NPV (Mango juice)=456,750P.VI.F.A 7%}-68,250]
NPV (Mango juice) =456,750*0.9346}-68,250] = 358,619
NPV (pineapple) = {192,500*0.9346}-87,500] =92,411
Net present value is ideal for discounting the cash flow since. The model considers the time value for money as well as considering the entire cash flow generated by the project as well as a giving a decision criterion to either accept or reject the project.
The disadvantage of payback period in ascertaining the worth of a security is that, the model does not consider the time value for money as well it doesn’t use all the cash flow available in ascertaining the future value. The internal rate of retune does not provide a clear ranking of mutual events and hence the model is difficult in ascertain mutual exclusive project.
Question six.
A).Net present value for refrigerator and decision criteria on the best frig
Refrigerator 1
Option 1
Option 2
Year
Cash flow
P.V.I.F.A 7%
p.V
P.V.I.F.A 7%
2015
280,000
O.9346
261682
280,000
261688
2016
294,000
1
256779.6
294,000
256779.6
2017
301,000
1
245706.3
301,000
245706.3
10-Jul
308,000
1
234973.2
308,000
234973.2
2019
315,000
1
224595
315,000
224595
2020
322,000
1
214548.6
Total P.v
1,223,742
Total P.v
1438285
Less Io
-2,000
Less Io
(-8,0000
N.p.v
1,221,742
N.p.v
1,438,285
From the cash flow analysis, It can be observed that option one of the electrician gives a highest net present value unlike option two and thus the management of the company should consider investing on refrigerator one since they will earn a net present value of $ 1,438,285.The advantage of Net present value as an investment appraisal technique is that, The model considers the time value for money as well as considering the entire cash flow generated by the project as well as a giving a decision criterion to either accept or reject the project.
Conclusion
From the above investment analysis and appraisal, it can observe that the new project will create a higher return from investment and thus the only limiting factor to the company is the capital constraint. It is apparent that the new product will yield a constant return and thus guaranteeing that the loan repayment will be consistent. There is no fault loan repayment based on the projected cash flow, the budgeted income statement as well as the budgeted statement of financial position. The company therefore appreciates if the loan can approve loan requirement for the new product that the company plans to introduce to the market.
The corporate social responsibility is adhered to hence production of a new product will not arm the environment. The company intends to recycle the water used for production in order to ensure that river and the environment are not exploited. This in general implies that the company as adhered to corporate social responsibility as well as the integrated reporting guideline lay down by international financial reporting standard.
The loan if approved can be used in a worthwhile project investment that is environment friendly as well as cost minimization implying that there
Reference list
Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso. Managerial Accounting: Tools for Business Decision Making. 2009.
Larry M. Walther, Christopher J. Skousen. Budgeting and Decision Making. 2012.
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