• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

I can't believe its potatoes.

Extracts from this document...

Introduction

I can't believe its potatoes I can't believe its potatoes (ICBIP) are a crisp manufacturing company established in 1999 and competing with other famous brands such as Tesco value crisp and Before eight crisps. Currently the company offers three products in unique flavor and color: red cinnamon, blue black pepper and yellow ginger. Its currents details are as follows: Products red cinnamon blue- black pepper yellow ginger (All numbers are in �) Existing sales 8000 10000 12000 Selling price 8.00 9.00 9.00 Variable cost Materials 1.10 1.70 2.80 (potatoes@ �0.5 per kg) Labour 2.45 2.55 2.00 (@ �2 per hour) Fixed cost allocation 3.00 3.70 3.75 ------------ ----------- ------------ Total cost 6.55 7.95 8.55 ------------ ------------ ------------Contribution per bag 1.45 1.05 0.45 Expected Sales 7000 6000 8000 Over the years ICBIP have witnessed decline in their sales as their competitors are providing higher customer satisfaction and value for the money. The manager of ICBIP, Ross Beckham is trying to fix the problems associated with red cinnamon and blue black. However manager has alerted the company that yellow ginger is their weakest product as it is making a very substantial profit compared to other products. Consequently Beckham has come up with possible solutions: 1. ...read more.

Middle

(iii)} 8000 = 7903.5715 -------------------- 8000 = 98.794643% Situation might be after the advertisement and promotion Breakeven point Form eq. (ii) 75 + 4.8 x = 7x 75 = 2.2x X = 34.09 Therefore total sales 238.6363 Margin of safety {From eq. (iii)} Percentage margin of safety = 10000 - 238.6363 ------------------------- 10000 = 97.61364% On the basis of the calculation decrease in price will give net gain of �1360, which is a good profit margin. On the other hand, reduction of sales solution displays the decrease in contribution of �6665 which quite high and company may face more losses. Moreover the overall profit of ICIBP from the normal activity without any solutions suggested is �44800. Last solution of spending advertisement the total sales of company will be 238.6363 and before it was 96.428565 but margin of safety is quite high in both the cases. In conclusion it's better to eliminate solution of sale reduction, as company will loose out �6665. It is not advisable to discard yellow ginger, as in usual business practice it is earning the sales of �44800. Furthermore spending on advertisement and promotion doesn't show enough profits for the company and hardly makes any impact. ...read more.

Conclusion

It gets tricky actually because students are required to calculate normally how ICBIP operates by allocating its labour hours and find the profit. There after students have to compare with other solutions to see whether this is appropriate solution or business should carry on the way it is. In advertisement and promotion solution students are required to calculate and compare the breakeven and margin of safety for both before and after invest in advertisement to decide option is the best for manager. For the second part students had to suggest which would be profitable use of limited supply. This part is difficult then the first one, key to this question was to find contribution per kg and then finding the demand. The logic behind the second half is that with limited supply contribution can be maximized through per unit of limitations. The most important when solving the sum is that students have to assume that 1kg of potatoes is required to make one packet of crisp. With this students will not be able to solve the problem. Also after finding out two ways of calculating the use of potatoes a good student would compare his/her answers and comment on it. Managerial Accounting and Finance Module no.: BS2512 Student no.: 0226318 Tutor: Barry Morse Word count: 1601 Date: 1/12/03 1 ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Structures, Objectives & External Influences section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Structures, Objectives & External Influences essays

  1. For my portfolio, I was asked to do an assignment on two businesses. I ...

    Competition Tesco has many competitors such as Sainsburys, Safeway, and many supermarkets have made Tesco to improve quality in both product and services and to reduce cost in items to keep their customers. Vectone Gnanam Telecommunication has many competitors such as Telecommunications cards such as world call voice Telecom, Sigiri, and selvam and Telecommunication business like BT, Argos.

  2. Btec National Business Level 3 Year 1 - Exploring Business Activity

    Microsoft refreshing take on online services is existing relationships and will get profit increase by the end of the year. To get Microsoft window live spaces, his requirements to pay for a year. "DB (David Beckham) at the centre of Window screen" stuff comes through the celebrity pages, because their focus is so much about marketing.

  1. Report composed of an interpretation of the ratios for Marks and Spencers and the ...

    Their results from 2000 show that they have a debtors turnover of 22.53 times. This is almost 20 times faster than Marks and Spencer. The results show a slight increase in 2001, however, the figure decreases to 21.89 times in 2002.

  2. Financial accounting

    � � Mar 02 Cash 50.00 Mar 31 Profit & Loss 56.47 Mar 12 Cash 6.47 56.47 56.47 4 Equipment A/C � � Mar 02 Bank 10500.00 Mar 31 Balance c/d 23370.00 Mar 21 Bank 12870.00 23370.00 23370.00 Apr 01 Balance b/d 23370.00 5 Vehicle A/C � � Mar 02

  1. History Of Tesco.

    In 1956 the first Tesco self-service supermarket was opened in a cinema that was converted in Maldon. By 1970, Tesco had become well known and a household name. Its reputation had been built on providing basic groceries at very competitive prices; the slogan "Pile it high and sell it cheap" was the title of Sir Jack Cohen's autobiography.

  2. Tescos HR policys

    'On the job' training means that the employees acquire their training or development in the workplace itself. An example of this in Tesco is when they recruit a school leaver who has little work experience. One of the supervisors will show the new recruit what they have to carry out and may show them how this is done.

  1. Business unit 2

    As there will be a lot of students wanting to play we need to decide where the goals will be set up and the teams. This will be done on the day of the match as we can tell how many players aside there we will.

  2. Applied Business. Investigating a business Preston Manor High School

    For example, if a Head of business department is on the leave, then the school may struggle to operate the business department, the staffs may not know what topics they have to teach in their lessons etc. This will cause the lessons to slow down and not being taught to full effect.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work