• 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 ...

    to provide them a good service while employees and manager want them to treat them fairly and pay them good benefits and they want their job to be secured. The shareholders in Vectone Gnanam Telecom want their business to make more profit and they want to know the business is

  2. Financial accounting

    VAT Total inc VAT (�) Mar 01 Office service 100 288.00 50.40 338.40 Mar 12 J Hoy 101 350.00 61.25 411.25 Mar 16 E Mark 102 72.00 12.60 84.60 Mar 25 Mills & Co 103 630.00 110.25 740.25 Total 1340.00 234.50 1574.50 Sales Returns Day Book Date Details Credit Note No Total (�)

  1. Tescos HR policys

    in health and safety and for this they may send their seniors to a course where they would acquire this knowledge from experts. This is an introduction to the organisation for new employees. It is designed to familiarise new recruits with the organisation, its rules, facilities, policies and key staff.

  2. Business unit 2

    out is considered very expensive costing from �40- �60, which is a lot of money for students to spend on one day and for one event. Another reason would be the high rate of people dropping out on the day of the event.

  1. What Really Determine the Payment Methodsin M&A Deals.

    Travlos (1987) exams annual data from 1972 to 1981 by employing an event study analysis and finds that share exchange as the means of payment usually results in significant losses to the shareholders of bidding firms. This result confirms his hypothesis that share exchange delivers negative information for the valuation of bidding firm's assets.

  2. My report will advise and suggest which company I believe is the best investment.

    It is also helpful for those interested in how well the business is doing, for example creditors, this will let them know it the business profits are enough to repay loans. During 2002 the gross profit margin figures for Cadflake Plc was 43.52% this means that for every �1 earned

  1. Investigating Business. Tesco PLC. I will be describing the aims and objectives of ...

    expanded their business from what it originally was which selling foods, this was essential for them to grow their business because in this market business need to take risks and offer different products/services to meet customers need?s and retain customer loyalty, Tesco?s is a good example of this as they sell most essential and non-essential products and so on.

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

    the right thing rather than looking at their objectives and identifying what factors they need to focus on. Having aims and objectives makes the school more organized and responsible. Aims are used in a business in order to develop and be successful.

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